3 Entertainment Stocks To Watch For Potentially Big Returns In The Long Run
The onset of the coronavirus pandemic has undoubtedly taken a toll on many entertainment stocks. Investors looking for top entertainment stocks to buy may realize that some of the names from last year may not appear on your radar again this year. That’s because many entertainment companies are seeing a major reshuffle to adapt to the ‘new normal’. Simultaneously, they are also preparing for the post-pandemic world. One perfect example to describe this current transition would be the entertainment powerhouse, Walt Disney Co. (DIS Stock Report). Disney is restructuring its media and entertainment divisions. This came as streaming became the most important facet of the company’s media business during the COVID-19 pandemic.
We all saw the positive vaccine news from Pfizer (PFE Stock Report) and Moderna (MRNA Stock Report) recently. But despite that, home entertainment providers are not fretting. The truth is, we all know that there will be some logistical hurdles to overcome even after these biotech companies have obtained approval for emergency use authorization (EUA). Now, I’m no expert on this. But I am guessing it’s unlikely that the vaccine will be delivered to the majority of the global population in the next few months or so.
There’s a great chance that traditional leisure activities that involve big crowds will not be having a speedy recovery anytime soon. Personally, I would stick with the home entertainment stocks. As we continue to practice social distancing in the near term, do you have these entertainment stocks on your watchlist this week?
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Top Entertainment Stocks To Watch Now: Sonos
In the face of the pandemic, consumers continue to spend more on home entertainment. While streaming companies have been the biggest beneficiaries, consumers are also looking for ways to enhance the streaming experience. Listening to music with a great sound system is one thing, watching movies with high-quality speakers is another ball game. Either way, with most people continuing to stay home, the demand for high-quality speakers remains robust. For instance, shares of Sonos (SONO Stock Report) are rising more than 20% during the extended trading session on Wednesday. This came after the company reported fiscal fourth-quarter earnings and fiscal year revenue guidance that beat expectations.
“As our customers recognize, Sonos products operate seamlessly together, with more products improving the experience. That’s why year in and year out, our existing customers add more products to their systems – every new household that we gain starts that cycle anew. Fiscal 2020 was the 15th year in a row we grew total households by at least 20%, while our existing customers once again showed strong repurchase habits, accounting for a record 41% of total product registrations. We deliver a consistent cadence of new, innovative products and services, and we have only started the process of realizing the lifetime value of our customers, both old and new.”– Patrick Spence, CEO of Sonos
Sonos reported fiscal fourth-quarter net income of $18.4 million, after reporting a loss in the same period last year. The company also launched a number of new products. They include a replacement to its most powerful speaker and a premium soundbar that works with TVs. For the upcoming fiscal year, Sonos projects $1.44 billion to $1.5 billion in revenue, beating analysts’ consensus. That represents a growth of 11% to 15%. Yesterday, the company announced a common stock repurchase program of up to $50 million. That could provide a boost to earnings per share going forward. With all that in mind, would you include SONO stock on your watchlist today?
Top Entertainment Stocks To Watch Now: DraftKings
Despite the huge run in DraftKings’ (DKNG Stock Report) stock price earlier this year, analysts believe the rally was just the beginning of a huge sports betting haul. Loop Capital analyst Daniel Adam believes that the true addressable market of online casinos is over $30 billion. That estimate is higher than the $20 billion figure that some other analysts have in mind. He believes the ‘correct valuation’ for DKNG stock should be $100 per share. Besides, he thinks there is a good chance for DraftKings to become the leader in the online gambling market.
The stock dilution, a surging number of coronavirus infections in the NFL, and insiders cashing out have all played their part in the stock’s slide in October. Within four months, the company and insiders put out 72 million shares on the market. That’s almost one-fifth of the company’s total outstanding shares. Certainly, investors don’t like that. What would you think when you see insiders selling out? Perhaps you wonder if they know something that you don’t.
As the company is not profitable, investors appear to value DKNG stock by looking at its revenue. But the potential of online gaming is certainly there. For instance, we can look at New Jersey, which is the biggest online sports betting and gaming market. In October alone, sports wagers exceeded $800 million in the state. And the leaders in that market are none other than DraftKings and its rival FanDuel. The question is, would you bet on this entertainment stock for its huge long-term potential as the industry continues to flourish?
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Top Entertainment Stocks To Watch Now: Activision Blizzard
Activision Blizzard Inc. (ATVI Stock Report), is one of the top entertainment stocks to watch for the holiday season. ATVI is a video game company actively owning and operating a plethora of video game studios. These studios include Treyarch, Blizzard Entertainment, Infinity Ward, King, upon many others. Its popular published games include Overwatch, Call of Duty, World of Warcraft, and more.
For the third quarter of this year, the company achieved a GAAP revenue of $1.95 billion. That outperformed guidance by over 8%. The company’s Call of Duty franchise continues to record strong performance. Call of Duty Mobile saw impressive levels of reach and engagement as the title crossed its one year anniversary. The title has also been released in China recently. With its strong portfolio continuing to shine, it would not be surprising if the company can scale greater heights in the coming quarter.
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, ATVI stock is an entertainment stock that continues to have bright prospects during and after the pandemic.
