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In this article, we discuss 11 of the best entertainment stocks to buy.Skip the detailed analysis of the entertainment industry and go directly to the 5 Best Entertainment Stocks to Buy.
The market outlook for the entertainment sector has been mixed in recent years. The home media and entertainment segment saw growth due to the pandemic, as consumers avoided the outdoors. according to politicianWorldwide entertainment revenue is expected to be $29.35 billion by the end of 2022 and is expected to reach $40.74 billion by 2026, representing a CAGR of 8.54%. Most of the revenue is expected to come from advertising.
With social media commerce sales expected to reach $45 billion by the end of the year, social media could see major changes. In 2021, 39% of U.S. customers said they spent more on merchandise than on experience in the past 12 months.
Amid these mixed market trends, the best entertainment stocks include The Walt Disney Company (NYSE:DIS), Take-Two Interactive Software, Inc. (Nasdaq:TTWO) and the Formula One Group (NASDAQ:Want Want).
our methodology
After a careful assessment of the entertainment industry, we picked these 11 stocks based on fundamentals, growth catalysts, financial metrics, and analyst ratings. Hedge fund sentiment surrounding each stock was also added. It’s taken from Insider Monkey’s database of 895 elite hedge funds.
11. News Corp (NASDAQ:newly created)
Number of hedge fund holders: 13
News Corporation (NASDAQ: NWS) is a New York-based mass media and entertainment company. The company also provides real estate and book publishing services.
News Corp (NASDAQ: NWS) was among the best entertainment stocks at $15.82 as of Oct. 11, near a 52-week low despite a solid fiscal 2022. The company’s revenue rose 11% this year, and segment EBITDA rose 31.1%. Net profit increased by 95.4% year-on-year, and net profit attributable to shareholders increased by 88.8% year-on-year.
News Corp (NASDAQ: NWS) pays a semi-annual dividend with a dividend yield of 1.27% as of October 11. The next dividend of $0.10 will be paid on October 12 to shareholders of record on September 14.
The Walt Disney Company (NYSE: DIS), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) and Formula One Group (NASDAQ: FWONK) and News Corp. (NASDAQ: NWS) together are the best entertainment stocks.
here what is L1 Capital News Corp (NASDAQ: NWS) was specifically mentioned in its Q2 2022 investor letter:
“The News Corp (NASDAQ: NWS) (Long -26%) share price fell during the quarter despite reporting third-quarter results that were in line with consensus expectations. The decline was largely driven by higher interest rates in Australia and the U.S. Shares in REA Group fell 17% in the quarter amid waning investor sentiment towards News Corp’s digital real estate assets. While concerns about real estate market drivers are likely to persist in the near term, we believe REA Group and Move Both are well-positioned to structurally improve their business during this period. We continue to believe News Corp. is significantly undervalued and continue to support ongoing initiatives aimed at unlocking value across the group.”
10. IMAX Corporation (NYSE:Big Mac)
Number of hedge fund holders: 15
IMAX Corporation (NYSE: IMAX) is a Canadian entertainment technology company focused on special venue films and cinemas. In the second quarter of 2022, 15 hedge funds held stakes in the company, compared to 14 in the previous quarter. In the second quarter, Nantahala Capital Management Slightly increased its stake in the company and became the most significant shareholder of IMAX Corporation (NYSE: IMAX), holding more than 2.7 million shares worth approximately $46.1 million.
On September 22, IMAX Corporation (NYSE: IMAX) announced the acquisition of SSIMWAVE Inc, an AI-driven company that provides video quality solutions to media and entertainment companies. The company’s patented technology has won Emmys in 2015 and 2020. IMAX Corporation (NYSE: IMAX) commented on its acquisition:
“In the short term, SSIMWAVE brings new, SaaS-based revenue and a world-class client roster to IMAX that aligns closely with our strongest and most successful content partnerships.”
On October 6, Benchmark analyst Mike Hickey maintained a Buy rating on IMAX Corporation (NYSE: IMAX) stock and lowered his price target to $21 from $25.
On September 7, IMAX Corporation (NYSE: IMAX) announced that it would expand its existing $200 million share repurchase program to $400 million. From 2017 through the second quarter of 2022, the company has repurchased 15% of its outstanding shares, valued at $175 million.
9. World Wrestling Entertainment, Inc. (NYSE:WWE)
Number of hedge fund holders: 27
World Wrestling Entertainment, Inc. (NYSE: WWE) is an American professional wrestling promotion and entertainment company. The company also focuses on the film sector and American football. In addition, World Wrestling Entertainment, Inc. (NYSE: WWE) licenses its intellectual property for action figures and video games.
World Wrestling Entertainment, Inc. (NYSE: WWE) profit margins make it one of the best entertainment companies. The company’s operating margin increased from 10.1% in 2017 to 24.5% in 2021 and 25% in the past twelve months. Return on LTM capital was 18.9% compared to the industry average of 2.7%. Additionally, World Wrestling Entertainment, Inc. (NYSE: WWE) recorded a net profit margin of 4.1% in 2017, increasing to 18.1% LTM.
On Sept. 8, Wolfe Research analyst Peter Supino upgraded World Wrestling Entertainment, Inc. (NYSE: WWE) from Peer Perform to Outperform with a $98 price target. Supino likes the stock’s fundamental risk/reward, noting that a potential takeover could include “free” call options.
8. Warner Music Group Inc. (NASDAQ:WMG)
Number of hedge fund holders: 28
Warner Music Group Inc. (NASDAQ: WMG) is a music entertainment company focused on the creation and distribution of music. As of 2021, the company covers digital and physical revenue market shares of 18.2% and 11.4%, respectively.
Warner Music Group Inc. (NASDAQ: WMG) IPO’d in 2020, and the company has increased its dividend sequentially at a compound annual growth rate of 15% during that period. The latest dividend, up 1 cent to $0.16 from the previous dividend, was paid on Sept. 1 to shareholders of record on Aug. 24. As of October 10, the company’s dividend yield was 2.81%.
On October 10, Goldman Sachs analyst Stephen Laszczyk initiated coverage of Warner Music Group Inc. (NASDAQ: WMG) with a Buy rating and $32 price target. The analyst said the stock is one of the highest-quality growth compound stocks under its coverage. Additionally, he sees Warner Music Group Inc. (NASDAQ: WMG) benefiting from long-term tailwinds ahead.
here What Cooper Investors said about Warner Music Group Inc. (NASDAQ: WMG) in its Q1 2022 investor letter:
“Warner Music was also sold to fund new investments. The business is entering a period of broader capital deployment than we expected, representing a change in our original value proposition. While these investment phases make sense for long-term strategic positioning, But they also increase execution risk and further drive free cash flow growth when other Watchlist stocks go public.”
7. Endeavour Group Holdings, Inc. (NYSE:EDR)
Number of hedge fund holders: 29
Endeavour Group Holdings, Inc. (NYSE: EDR) is a California-based talent agency and entertainment and sports company. As of the second quarter of 2022, 29 hedge funds held stakes in the company, compared with 28 in the previous quarter. Endeavour Group Holdings, Inc. (NYSE: EDR)’s most important stakeholders in the second quarter were Silver Lake Partners Shares are worth more than $1.89 billion.
Endeavour Group Holdings, Inc. (NYSE: EDR)’s recent portfolio and acquisitions make it one of the best entertainment stocks. The company owns the UFC, the world’s largest MMA promotion company, as well as Pro Bull Riders and the Miami Open. Additionally, the company completed its $800 million acquisition of sports betting company OpenBet on September 30. Management said the acquisition will allow the company to enter the fast-growing gaming market and generate new revenue streams.
On August 29, Credit Suisse analyst Douglas Mitchelson reiterated his overweight rating on Endeavor Group Holdings, Inc. (NYSE: EDR). However, Mitchellson lowered his price target on the company to $33 from $40 as interest rates rose and the weighted average cost of capital increased from 7.4% to 8%.
6. Penn Entertainment, Inc. (NASDAQ:University of Pennsylvania)
Number of hedge fund holders: 33
PENN Entertainment, Inc. (NASDAQ: PENN) is an American company with a presence in casino games and racetracks in the United States and Canada.
On October 6, Canaccord analyst Jason Tilchen initiated a Buy rating and $50 price target on PENN Entertainment, Inc. (NASDAQ: PENN). The analyst noted that commercial gaming in the U.S. generated more than $50 billion in gross gaming revenue last year, and the industry is expected to double over the next decade. For PENN Entertainment, Inc. (NASDAQ: PENN), the analyst added that at current levels, investors can take advantage of “a reasonably valued, sustainable and lucrative regional casino business” that will Significant use of online sports betting and online gaming markets.
As of the second quarter of 2022, 33 hedge funds held stakes in PENN Entertainment, Inc. (NASDAQ: PENN) with a combined value of $455.747 million. HG Vora Capital Management Added the company to its portfolio in the second quarter and became the company’s most significant shareholder, holding 3.5 million shares worth $106.47 million.
In addition to The Walt Disney Company (NYSE: DIS), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) and Formula One Group (NASDAQ: FWONK) , PENN Entertainment, Inc. (NASDAQ: PENN) is also one of the best entertainment stocks.
here Baron Funds specifically mentioned PENN Entertainment, Inc. (NASDAQ: PENN) in its Q2 2022 investor letter:
“PENN Entertainment, Inc. (NASDAQ: PENN) fell 28.3% in the quarter, with results down 71 basis points. This was driven by investor concerns that a potential recession would slow or decline growth. The company’s traffic Or spending levels haven’t changed significantly, and its earnings are still strong. Penn is generating strong cash flow that is more than enough to offset investments in its digital growth opportunities. It’s using excess cash to buy back its stock. Penn is well positioned to deal with the economic downturn If that does happen, the company’s revenue and EBITDA should still be above pre-pandemic levels.
Management continues to use its excess cash for share repurchases and debt relief as well as continued investments in its digital business. We believe the $50 million loss in its digital business this year is modest compared to Penn’s $1 billion casino EBITDA. The loss of its digital business represents customer acquisition costs as other states legalize online gambling. Because the cost of retaining existing customers is much lower than acquiring new customers, we expect marketing costs to decline as Penn’s customer base builds.
Penn’s core brick-and-mortar casino business remains strong, with the company having a healthy regional casino business and a strong balance sheet to fund its digital losses. “
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Disclosure: None. The 11 Best Entertainment Stocks to Buy was originally published on Insider Monkey.
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