After struggling to find its footing following myriad questions about corporate direction, Disney (NYSE:DIS) fired back with a strong earnings performance, thus putting other entertainment stocks on notice. Still, that doesn’t mean investors should ignore alternatives to the House of Mouse.
Earlier this month, the Magic Kingdom posted better-than-expected profits for its December quarter. Also, it provided earnings guidance for the September 2024 fiscal year that exceeded Wall Street’s estimates Even the company’s semi-annual dividend is getting a boost by 50%. In other words, there’s a lot to love here.
Nevertheless, Disney still faces long-term challenges. One of them centers on the future of the enterprise’s linear TV assets. It also produced some real stinkers in the box office, opening the door for alternative entertainment stocks. Factor in some risky moves – such as streaming live sports – and circumstances could get interesting.
To be sure, Disney is off to a great start this year, gaining over 20%. Still, for those who want to go a slightly different path, these are the alternative entertainment stocks to consider.
Apple (AAPL)
As a consumer technology giant, Apple (NASDAQ:AAPL) is synonymous with smart devices. However, it could start to move the needle within the ranks of compelling entertainment stocks. In contrast to other streaming platforms, Apple TV+ crafted an intriguing niche by focusing on original programming. Rather than live sports or network TV shows, users can instead find unique big-budget movies and award-winning series.
If you look at the offerings on tap, we’re not talking about straight-to-DVD (remember those?) junk. Nor are we talking about content that has jumped multiple sharks multiple times. No, these are compelling movies and programs with some of the biggest Hollywood A-listers.
Further, the advantage that Apple levers is that if anything else, it can always fall back on its core devices and service business units. However, I’m not really seeing how AAPL stock can fail here given the underlying connectivity ecosystem.
With shares off to a rough start, this juncture could be an ideal to consider Apple. Analysts rate shares a moderate buy with a $208.07 average price target.
Amazon (AMZN)
As an e-commerce powerhouse and an all-around tech stalwart, it’s difficult to bet against Amazon (NASDAQ:AMZN). From buying up businesses and expanding into multiple areas beyond supporting its core online marketplace, AMZN continues to impress investors. And it could give Disney a good run for its money as one of the rising entertainment stocks.
First, you can’t overlook the convenience factor. I’d venture like most people, I’m logged into Amazon’s website all the time. On my downtime, when I want to buy something, I do so. Further, through Amazon Prime Video, I enjoy access to an enviable content library. We’re not just talking about U.S.-made movies and TV shows but international offerings as well.
Second, the company broadcasts several enticing series and original movies via Amazon Studios. Targeting an audience that enjoys grittier realistic content, the e-commerce firm has a winner on its hands. Analysts agree, pegging shares a unanimous strong buy with a $207.92 average price target, implying almost 21% growth potential.
Warner Bros Discovery (WBD)
An enterprise that I own through a spinoff by telecommunications giant AT&T (NYSE:T), Warner Bros Discovery (NASDAQ:WBD) represents the higher-risk, higher-reward component of alternative entertainment stocks. Since the start of the year, WBD stock fell almost 15%. And in the past 52 weeks, the equity dipped more than 33%. Since the spinoff, shareholders have been seeing almost nothing but red ink. I would know.
However, it’s possible that we could see some daylight emerge. As a multinational mass media and entertainment conglomerate, Warner Bros offers top TV brands. These include CNN, TBS, TNT, HBO, along with the namesake brands Warner Bros and Discovery.
In addition, what makes WBD attractive as a candidate for top-tier entertainment stocks is the potential to deliver some hard-hitting content. To the ever-popular Shark Week series to the DC Comics unit, Warner Bros is no slouch. It just needs to find its footing.
Analysts are willing to give it a chance, rating shares a consensus moderate buy. Also, the average price target hits $14.23, implying almost 43% upside potential.
On the date of publication, Josh Enomoto held a LONG position in T and WBD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
