Entertainment related companies control vast media empires that can influence millions of viewers.
Not only do they produce content, but they also have a significant wait in advertisement if they control their own networks. Companies like Disney can also have derivative products that can produce significant cash-flow. These companies are able to shape culture by their offerings and what they decide to produce.
The Entertainment industry has been in deep transformation for years. It’s shaken up by streaming players and technology companies that are now getting into Entertainment Production. Netflix, Apple, Amazon and the likes are now as much content producers as technology companies.
Who is building the next Media Empire?
Here is a quick overview of the top entertainment production companies stocks you should watch…à
🎬 Entertainment Production
Cineplex Inc (CGX-T)
It looks like they are going to be bought by a UK company. The stock price surged on the announcement, although there is a long period before the deal closes and Cineplex still has a chance of finding a higher bid. They offer a sustainable dividend thanks to theatre traffic remaining constant and with other additions to their revenue stream.
Being purchased? Why its trading over the $34 offer price is possibly due to short covering. There is a long period before the deal closes and Cineplex still has a chance of finding a higher bid. He would continue to hold it to tender and not sell.
Netflix Inc. (NFLX-Q)
Netflix is the online streaming service that most people know and use. It’s still one of the staples of the online streaming offerings. The space is starting to get crowded with Disney+ and Apple TV+ entering the arena. Their focus on their in-house content, which has won awards and keeps subscribers, will be key as the content war ramps up.
(A Top Pick Oct 02/19, Up 45%) There's room to own both this and Disney, which has worked out well for him. The quality of content on both streamers is phenomenal and they're global.
The iPhone has been a staple in Apple’s line and has been their key product for some years. Now, they are building off their hardware to move into services such as News+ and TV+. Although there isn’t a load of content, more is in their pipeline. They have the budget to make high quality shows, and their advantage of being ingrained in the Apple ecosystem could be a major advantage.
What return over 10 years? A good holding and finally trading at an accurate multiple. He bought this in 2006 at $9. You can hold this for the future. Apple will be a player in 5G that will demand a huge turnover in hardware (Apple phones). Apple also boasts on a sky-high customer loyalty rate.
Discovery Communications Inc (DISCB-Q)
A US based media company, that most people will know. Their most well-known network in their collection is probably the Discovery Channel. They also do partnerships and buy distribution rights for sports broadcasting.
(A Top Pick June 29/15. Down 17.81%.) The worry is that prior to buying Eurosport, they may not have the best properties and will lose some subscribers to competition, and money they get from distributors will decrease. They will be reporting shortly, and depending on that he may get back into the name.
IMAX Corp. (IMAX-N)
The stock chart has closely resembled that of Cineplex with pressure from changing consumption patterns. People are watching movies at home rather than going to the cinema. The stock has been range-bound for some time. They are moving into China so there is a chance the stock may pick up.
Cineplex has a similar chart with pressure on the cinema business. IMAX is dead money, until it breaks above $24. It's been range-bound since mid-2017. You can start a small position and see it the breakout happens.
A dividend favourite that has good cash flow. They bought Time Warner, who is a major player in distribution, and production of shows and films. Analysts expect the dividends to continue and the stock is great for those looking for income.
They bought Direct TV, which is losing subscribers; also have internet and wireless operations. They bought Time-Warner, so they're going into the streaming business, but have taken on a lot of debt to do that. They've sold some assets to reduce that debt which remains high. Pays a nice dividend though. In contrast, Verizon, sticks…
Comcast Corp (CMCSA-Q)
A cable and broadband operator. It’s the largest cable company in the U.S.. Cord-cutting is a major challenge for this company, although they are the infrastructure that supports access to online content, so the growth of streaming services can counteract the cord-cutters.
It is a steady performer. 15% per year dividend growth. The stock has traded in a range until recently when it broke out to new highs. The group as a whole is behaving well. He likes the combination of assets and their opportunity for streaming in this area. (Analysts’ price target is $51.00)
Walt Disney (DIS-N)
The Disney+ streaming service has given the stock a boost. The deal with 20th Century Fox was taken positively by analysts. It is currently trading at 20x earnings and is well-positioned to be a competitor to Netflix.
The impact of the coronavirus. They have a diversified operating footprint. They had to close their Shanghai park, which is a temporary hit to their earnings, but earnings will come back later. Disney is a good way to play the virus; he's been buying more shares. Other parts of the operation will offset those virus…
CBS Corp (CBS-N)
An American mass media corporation. They are in commercial broadcasting, publishing and television production. A value play. However, they have faced headwinds from cord-cutting in cable.
(A Top Pick April 6/17, Down 25%) A likely deal with Viacom; short-term highly accretive, but long-term faces cord-cutting in cable. This is one of his worst picks.
Live Nation Entertainment Inc. (LYV-N)
A global entertainment company that came out of a merger between Live Nation and Ticketmaster. A top concert venue and ticketing company in the world. It recently found a short term bottom.
(A Top Pick Apr 01/19, Up 15%) A global company. Artists are now making money from concerts. They own Ticketmaster and then attendees pay for parking, concessions, and lots of add-ons. It's never been cheap and it will never be cheap since it's a great operation.
Twenty-First Century Fox Inc (FOX-Q)
A Mass media corporation that is global. They regularly buyback stocks and bring value back to investors. They have many different interesting assets, including sports so it is worth a closer look.
The Stars Group The regulation of internet sports betting in the U.S. has been a pushback and he doesn't know how it'll resolve itself. TSGI just partnered with Fox Sports and Fox has other interesting assets, so this is a better way of playing online gambling.
A cloud service, e-commerce, and media company that is synonymous with North American online shopping. The Prime package gives access to a host of different services, including Amazon Prime Video. The service has original content as well as some well-known shows and movies. The content is bundled with the prime subscription, which may help buoy their entertainment business.
AMZN vs. MSFT Prefers Microsoft, and can justify the valuation at these levels, but wait for a pullback of 5-10% to buy. MSFT has a very strong balance sheet and net cash position. It's transitioning to a subscription model. Cloud business is growing well. For 1-2 year horizon, MSFT will continue to do well.