In the vibrant realm of media stocks, the quest for undervalued entertainment stocks has never been more enticing. The entertainment industry has showcased remarkable resilience post-pandemic, promising a rosy growth phase for the sector.
After the pandemic’s peak, entertainment powerhouses efficiently slashed COVID protocols, providing a much-needed respite to investors.
This maneuvering has enabled the sector to sidestep the continual disruptions experienced during the pandemic effectively while creating undervalued entertainment stocks for investors.
Yet, as the show must go on, rising operational costs and financial headwinds lurk backstage. From escalating labor charges to the daunting task of securing financing amid interest rate hikes.
However, for savvy investors, this evolving landscape might be an act worth keeping tabs on. These are the undervalued entertainment stocks I feel the most excited about.
Netflix (NFLX)
Tipranks Upside Potential: 10%
Netflix (NASDAQ:NFLX) is a juggernaut in the streaming landscape, with its audacious pivot into the burgeoning sector ushering in a revolution of sorts, silencing early doubters as Netflix continues shaping how we consume content.
Netflix stock is making headlines, soaring 41% year-to-date after surviving a major plunge during a bear market. The latest figures further flaunt the platform’s allure, showcasing a robust base of 238 million paid subscribers and a 5.9 million bump in subscribers in its most recent quarter.
With the firm’s latest crusade against password sharing and a budding interest in ad revenue, its growth is insatiable.
Given this rousing performance in 2023, pondering what lies ahead is tempting. While analysts project tempered growth for the year, the anticipation for a stellar 2024 is palpable. The Netflix saga, it seems, is still unfolding. For now it’s one of the undervalued entertainment stocks you don’t want to sleep on.
Disney (DIS)
Tipranks Upside Potential: 28%
Disney (NYSE:DIS) is a powerhouse in the entertainment sphere, with a well-calibrated strategy emphasizing three pillars: film production, parks and resorts, and streaming.
At the heart of Disney’s cinematic universe is a pivot toward big-ticket films and expansive franchises. This strategy, punctuated by smash hits such as “Avatar: The Way of Water,” ensures a perpetual interest in its evergreen content collection. Layer that up with the surging popularity of classic titles on Disney+, the film studio segment alone makes for an interesting argument for investors.
Its Parks and Resorts dividion remains on an impressive upward trajectory. With global expansions and fresh attractions being added each quarter, Disney’s brand equity positively impacts its financials.
Meanwhile, its streaming service continues its march forward with a refined focus on user experience, content creation, and astute pricing. Add to this mix Disney’s foresight in leveraging ESPN’s clout in the sports betting arena points to a massive growth trajectory.
Endeavor Group Holdings (EDR)
Tipranks Upside Potential: 30%
In an audacious move earlier this year, Endeavor Group Holdings (NYSE:EDR), a titan of talent agencies, masterminded a merger of two of the top entertainment behemoths, WWE and UFC. This strategic union promises to redefine the entertainment landscape effectively.
The synergy between WWE’s flair for character-driven narratives and UFC’s roster of fighters positions Endeavor for unparalleled long-term success in the quest for the next iconic star.
Moreover, the Hollywood-infused prowess will facilitate mainstream breakthroughs for both companies’ talents.
Endeavor Group Holdings recently unveiled robust numbers in their recent Q2 report. The company reported a GAAP earnings-per-share of $1.29, outstripping expectations by a substantial $1.19.
Revenue clocked in at an impressive $1.44 billion, marking a 9.9% uptick year-on-year, surpassing estimates by $20 million. With a sturdy Adjusted EBITDA of $304.9 million, Endeavor’s profitability trajectory paints a promising picture, reflecting the company’s unwavering momentum in its niche.
Spotify Technology (SPOT)
Tipranks Upside Potential: 33%
Spotify Technology (NYSE:SPOT) is a world-renowned music streaming giant that continues to strike the right chords in digital entertainment.
Offering listeners a vast repertoire of songs, podcasts, and videos, the platform ensures that there’s something for everyone, whether you’re on a free tier or a premium subscriber seeking an ad-free sanctuary.
In its most recent quarter, Spotify not only reported a robust €3.17 billion in sales, marking an 11% year-over-year bump, but its Monthly Active Users (MAUs) shot up to a staggering 551 million, surpassing even its upbeat projections.
The firm’s cadence didn’t miss a beat with its premium subscribers either, clocking 220 million, a segment that saw a record-breaking second-quarter surge, up 17% year-over-year.
It raised the curtain with new features, including the “AI DJ,” which is making waves in the UK and Ireland. Its robust “Spotify Ad Analytics” and AI-crafted podcast summaries could add another layer to its growth story.
Amazon (AMZN)
Tipranks Upside Potential: 29%
Amazon (NASDAQ:AMZN) stands tall in the multifaceted realm of entertainment and eCommerce, with its streaming service effectively coexisting alongside its shopping behemoth. This duality presents Amazon as a compelling pick among top entertainment stocks.
The growth trajectory of Amazon Prime Video subscribers speaks volumes, jumping from 133.2 million subscribers in 2020 to an anticipated 157.3 million in 2023.
The company’s pivot towards integrating ads into Prime Video further underscores its commitment to maximizing the streaming platform’s potential. Additionally, with the rapid growth expected in the OTT market, expect Prime to continue growing at a healthy pace for the foreseeable future.
Moreover, speculations swirl around Amazon’s potential foray into the physical cinema landscape.
By acquiring AMC Theatres, Amazon could amplify its Prime movies while redefining entertainment consumption, positioning Amazon as an even more dominant force in both the digital and physical entertainment spheres.
Paramount Global (PARA)
Tipranks Upside Potential: 24%
Paramount Global (NASDAQ:PARA) remains an unyielding beacon in the entertainment sphere, consistently raising the bar with its dedication to exceptional content. With a repository of over 200,000 TV episodes and an impressive 4,000 films, its unparalleled storytelling capability ensures that it crafts narratives that stand the test of time.
Diving deep into the digital age, Paramount’s shift to a direct-to-consumer strategy pays many dividends. Its second-quarter results reveal a striking 40% leap in Direct-To-Consumer revenues, reaching a robust $1.67 billion. Leading this digital charge is Paramount+, registering a remarkable 47% growth spurt and amassing 61 million subscribers.
From a strategic standpoint, it aims to expand its streaming prowess while optimizing traditional sectors to craft a sustainable business model. As Paramount gears up for a transformative 2024, it remains more than just a promising stock; it’s a star that continues to burn brightly in the investing arena.
IMAX (IMAX)
Tipranks Upside Potential: 31%
In a world where streaming platforms continue to gain ground over traditional platforms, IMAX (NYSE:IMAX) reaffirms the irreplaceable allure of the silver screen. This manufacturer of novel projection systems offers movie enthusiasts an enthralling experience. Simply put, IMAX’s immersive magic is beyond digital streaming capabilities.
The company’s recent performance is a testament to its resilience and cinematic prowess.
It delivered impressive second-quarter numbers, partly propelled by significant system signings amidst the film industry’s resurgence post-pandemic. Bolstering these results was the remarkable success of Christopher Nolan’s biopic, “Oppenheimer,” which has grossed over $500 million worldwide.
With a second-quarter adjusted earnings-per-share of 26 cents, beating estimates by a nifty 11 cents, and revenues spiking over 30% year-over-year to $98 million, IMAX isn’t just performing; it’s dazzling.
Couple this with a 31% year-over-year surge in gross margin and a 29% year-over-year jump in adjusted EBITDA, and it’s abundantly clear IMAX is in a league of its own.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
