3 Top Entertainment Stocks To Watch In September 2020
The growth we are seeing in entertainment stocks has been complicated this year. While some top entertainment stocks to watch have ground to a complete halt due to the economic shutdown, others are thriving from the stay-at-home theme. The stocks least affected by social distancing generally performing the best. With the stock market continuing to climb despite the economy still looking very wobbly, should investors be concerned? Maybe for a start, we could start looking at the best stocks to buy now by judging how well they can adapt to the pandemic. And if they have been leading the charge well, investors might want to ignore the noise and focus on these stocks right from the start.
Consumers are sticking to the safety of their homes for the foreseeable future. Therefore, some of the top entertainment stocks to buy in the market are now having a moment. Simply put, the pandemic has created a seismic shift in the entertainment industry. From movie theaters to streaming platforms and from physical casinos to online betting, these are just a few examples that come to mind. Disney’s (DIS Stock Report) decision to send Mulan straight to its streaming platform, Disney+ is a perfect example of the ongoing transition of entertainment companies.
We know some of the top entertainment stocks could catch a tailwind when the pandemic is over. But here’s the thing, even a successful launch of a vaccine this year wouldn’t guarantee a quick recovery. As a result, there’s a great chance of leisure that requires social distancing is unlikely to have a speedy recovery anytime soon. Personally, I would stick with the stay-at-home entertainment stocks. With the digital revolution underway, are these entertainment stocks on your watchlist this week?
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Top Entertainment Stocks To Buy [Or Sell] Now: DraftKings
First, up the list, shares of DraftKings (DKNG Stock Report) soared all-time highs on Monday. This comes after the company announced a deal with ESPN. The deal will feature DraftKings content on the network’s digital and TV platforms. Monday’s surge follows the strong movement from last week, as investors bid DKNG stock higher in celebration of the return of the NFL.
Apart from DraftKings, ESPN is also signing another co-exclusive agreement with Caesars Entertainment (CZR Stock Report). Both DKNG stock and CZR stock surged 17.27% and 10.54% respectively after reporting the news.
At a valuation of almost 47 times trailing sales, DraftKings needs to achieve strong growth to justify the premium. Many investors believe the company will benefit from the increasing legalization of sports betting and international expansion. But the ESPN deal certainly helps DraftKings in acquiring new users. Nevertheless, the share price has already gone up so much this year. One should consider if the upside has been priced in.
Top Entertainment Stocks To Buy [Or Sell] Now: Activision Blizzard
Activision Blizzard (ATVI Stock Report) enjoyed a strong second financial quarter. Earlier this month, the gaming giant released Tony Hawk’s Pro Skater 1+2 and came in as the second best selling gaming title in the UK during the week of its release. The company released another smashing quarter early last month. While it had a rough year in 2019, the company managed to overturn its fate. It recorded a 270% year-over-year increase in revenue in the most recent quarter. That’s thanks to its Call Of Duty game title, including a mobile version released last October.
While Tony Hawk’s Pro Skater isn’t as important for Activision as Call of Duty or Candy Crush Saga, a strong performance is certainly welcome as it can help provide a boost to the company’s next earnings report.
Under the leadership of CEO Bobby Kotick, Activision Blizzard has a great track record of releasing games that have staying power. They not only keep existing fans engaged but also attract new players. With strong revenue numbers and a growing presence, Activision Blizzard is an entertainment stock that is expected to outperform the market this year.
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Top Entertainment Stocks To Buy [Or Sell] Now: Roku
Shares of Roku (ROKU Stock Report) have been making big moves in recent weeks. Now that ROKU stock seems to be experiencing some pull-back with the broader tech sell-off, it has created some compelling buying opportunities.
The company’s business strength has been made clear during the coronavirus pandemic. While many digital advertising companies saw revenue growth decline or slow significantly, Roku’s revenue soared 46% year over year.
Roku is not only resilient during the pandemic, but it is showing itself as a respectable player in the game. Second-quarter revenue grew 42% year over year to $356 million. What’s interesting is that the stock is trading at a decent valuation given to the company’s strong growth prospects. At less than 10 times analysts’ forecast for next year’s revenue, is ROKU stock a steal?