Are These The Best Leisure Stocks For Your April 2021 Watchlist?
As we pass the one-year mark of the current pandemic, people continue to rely heavily on the leisure industry. Accordingly, this is where leisure stocks come into play for investors right now. Like it or not, the world can be a daunting place for many now and leisure activities offer an escape. Whether it is gaming, streaming services, or even marijuana, there are many investment options in this industry now.
For instance, we could look at MGM Resorts International (NYSE: MGM), and Tilray (NASDAQ: TLRY) now. Although these companies offer very different services, they operate in the leisure industry, nonetheless. On one hand, MGM continues to expand its impressive gaming portfolio into the online gambling space. On the other hand, Tilray is looking at major tailwinds thanks to recreational marijuana being legalized in New York. As a result, both companies’ shares have more than tripled over the past year.
Another hot name in the industry now would be Discovery Inc. (NASDAQ: DISCA). Sure, the company’s shares were hit by large block trades earlier this week. However, Discovery has been steadily bolstering its streaming platform, Discovery Plus, with a large variety of programs. This ranges from several Gordon Ramsay cooking series to create a new “clean mobility series” with Hyundai (OTCMKTS: HYMTF).
By and large, it seems that the leisure industry keeps coming up with new ways to entertain consumers. Given all of this, I can understand if you are interested to invest in the industry yourself. If you are, here are four top leisure stocks to add to your watchlist this week.
Top Leisure Stocks To Buy [Or Avoid] Now
- Roku Inc. (NASDAQ: ROKU)
- Yelp Inc. (NYSE: YELP)
- Penn National Gaming Inc. (NASDAQ: PENN)
- Spotify Technology (NYSE: SPOT)
First, we will be looking at video streaming company Roku. For the uninitiated, Roku develops video streaming hardware and operates a streaming platform of its own. Sure, its comprehensive streaming offerings would give it an edge over the competition. But, the real key in Roku’s approach to streaming is how its platform works. Essentially, Roku brings content from streaming giants like Disney (NYSE: DIS) and Netflix (NASDAQ: NFLX) into one place. In turn, the company profits from taking a cut of subscription fees paid through its platform and ad-revenue for free content. While the top streaming companies duke it out, Roku continues to benefit regardless.
Not to mention, Roku acquired Nielsen Holdings’ video advertising business earlier this month, bolstering its ad targeting capabilities. With ROKU stock’s current year-to-date dip, could it be a good leisure stock to buy now?
Well, Wall Street appears to think so. Specifically, Truist Securities analyst Matthew Thornton upgraded the stock to a buy rating with a price target of $367. This would mean a premium of about 17% over its closing price of $311.96 on Tuesday. In detail, Thornton cites Roku’s ongoing international expansion into the massive U.K. and Brazil TV markets as potential growth factors. Given all of this, will you be watching ROKU stock right now?
Another top leisure stock to consider now would be Yelp. In brief, the company develops, hosts, and markets its crowdsourced review platform of the same name. Through its proprietary website and mobile app, users can search for, compare, and review businesses. Additionally, the company also operates Yelp Reservations, an online reservation service. With more consumers going out amidst improving pandemic conditions, Yelps could be looking at higher user traffic overall. If anything, this would make YELP stock a prime reopening play for investors as well. Likewise, the company’s shares have already doubled in value over the past year, recovering to pre-pandemic levels. Could this mean it has more room to grow moving forward?
According to Citibank (NYSE: C), the answer could be a yes. Particularly, analyst Jason Bazinet hit YELP stock with a buy rating and upped his price target from $33 to $48. Bazinet likes the stock because of three key reasons. To begin with, Yelp boasts a clean balance sheet and generated cash flow throughout 2020’s headwinds.
Next, the analyst expects the restaurant ad market to gain momentum as the pandemic ends. Topping all of that, Bazinet said that Yelp has a “handful of initiatives” that could promote top-line growth and margin expansion. As more businesses reopen, is now the time to watch YELP stock?
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Penn National Gaming Inc.
Penn National Gaming (PENN), is an operator of casinos and racetracks. The company operates 41 facilities across 19 U.S. states, boasting the nation’s largest and most diversified regional gaming footprint. For the most part, PENN’s portfolio consists of casinos and hotels. Like most conventional casino operators, the company has and continues to benefit from adapting to online betting trends now. Thanks to its omnichannel approach to the sports betting industry, PENN now caters to over 20 million loyalty program members. Given that PENN stock has skyrocketed by over 700% in the past year, investors appear to like what they see.
All this is great, but you might be wondering if the company can keep up its momentum in a post-pandemic world. Well, for one thing, PENN’s traditional offerings would become viable as the broader economy recovers along with the tourism industry. Furthermore, the company has been hard at work expanding its online betting offerings as well. Just this month, the company launched its sportsbook mobile app in Illinois and Virginia. Even as the pandemic comes to an end, these features will remain a convenient means of placing bets.
On top of all that, PENN is also in a 20-year strategic partnership with Rivers Casino in New York. Through this partnership, PENN seems to have its eyes on the potentially massive New York sports betting market. Should the state grant regulatory approval for this market, I could potentially see PENN stock rising further. How about you?
Next, we have leading audio streaming company Spotify. When it comes to leisure, many turn to Spotify for their audio content needs. The Swedish streaming company caters to users in 178 countries with its library of over 70 million tracks. In short, users can either listen for free on Spotify’s ad-supported service or pay for a premium on-demand listening subscription. No doubt, this “access-based” model continues to benefit Spotify which boasts over 155 million paid subscribers. Despite its performance this year, investors could be watching SPOT stock now on account of Spotify’s latest acquisition.
Yesterday, Spotify revealed that it would be buying Betty Labs, the company behind the live audio social app, Locker Room. Namely, Spotify is planning to expand Locker Room into an “enhanced live audio experience” in the long run. Notably, this would mark a strategic play by the company. If you think about it, this move makes sense.
Recall the recent hype over Clubhouse, another social audio app where people gathered to chat in virtual rooms. The premise here is simple, yet over 12 million people have flocked to this app to recreate in-person conversation experiences. Time will tell if Spotify can make the most of Locker Room. In the meantime, would you consider adding SPOT stock to your watchlist?