In this article, we discuss the 10 best media stocks to buy now. You can skip our detailed analysis of the media industry, and go directly to read the 5 Best Media Stocks To Buy Now.
Over the past few years, the media industry evolved from traditional theatres to online digital streaming channels. Like many other sectors, the media industry was hit hard by the pandemic in 2020, causing production delays. Moreover, even after one year of the pandemic, over a quarter of all theatres in the U.S. stayed closed, as per the government’s instructions. According to a report published by PWC, theatre box office revenue fell by 71% in 2020. However, the shift to digital media bode well for the industry, offering good investment opportunities.
The U.S. media industry is the largest in the world, accounting for $660 billion of the $2 trillion worth of global market, as reported by International Trade Administration. The global media industry is expected to grow at a CAGR of 5%, reaching $2.6 trillion by 2025. The industry regained its momentum after the pandemic, fueled by demand for digital channels. As reported by Forbes, the streaming video accounted for 26% of the whole viewing in 2021 so far, compared with 25% of the broadcast TV.
S&P 500 Media and Entertainment Index gained 43.5% in the past year, compared with 34.2% gains of S&P 500 during the same period. The Covid-related threats are still lingering over the media industry as companies offering physical experiences are not likely to return to normal any time soon, according to a report by Deloitte. However, digital streaming services are bound to grow more as people spent nearly $16 billion on online streaming services in the first half of 2021, presenting a 5% growth from the same period last year, according to the data collected by The Digital Entertainment Group.
Some of the notable media stocks include Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), The Walt Disney Company (NYSE:DIS), and Comcast Corporation (NASDAQ:CMCSA).
Photo by Myke Simon on Unsplash
Our Methodology:
Let’s analyze our list of the best media stocks to buy now. The companies included in the list belong to the different sectors of the media industry and deal in broadcasting and online streaming services. These stocks are ranked according to the number of hedge fund positions in each of them. Along with this, we also considered analysts’ ratings and fundamentals while picking these stocks.
10 Best Media Stocks To Buy Now
10. Gray Television, Inc. (NYSE:GTN)
Number of Hedge Fund Holders: 20
Gray Television, Inc. (NYSE:GTN) is an American television broadcasting company, founded in 1946. After hitting a low of $9.49 per share in April 2020, the stock has bounced back, gaining 25% year to date.
At the end of Q2, 20 hedge funds tracked by Insider Monkey reported owning stakes in the company, compared with 25 in the previous quarter. The total value of these stakes is $101.6 million. Darsana Capital Partners is the company’s largest shareholder in Q3, owning shares worth $22.3 million.
On November 4, Gray Television, Inc. (NYSE:GTN) announced a quarterly dividend of $0.08 per share. The stock’s current dividend yield stands at 1.27%. In Q2, the company reported revenue of $547 million, up from $451 million, during the same period last year. Recently, Barrington Research lifted its price target on Gray Television, Inc. (NYSE:GTN) to $25, with an Outperform rating on the shares.
Like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), The Walt Disney Company (NYSE:DIS), and Comcast Corporation (NASDAQ:CMCSA), Gray Television, Inc. (NYSE:GTN) is one of the notable stocks to buy in 2021.
9. Cable One, Inc. (NYSE:CABO)
Number of Hedge Fund Holders: 20
Cable One, Inc. (NYSE:CABO) is an American broadband communications provider, founded in 1986. With over 1.1 million customers residing in 24 states, the company remains one of the best media stocks to buy now.
Cable One, Inc. (NYSE:CABO) announced its Q3 results on November 4. The company’s revenue for the quarter stands at $430.2 million, up from $339 million during the same period last year. The residential data revenue accounted for roughly $220 million of the gross revenue. Recently, KeyBanc set a $2,480 price target on Cable One, Inc. (NYSE:CABO), with an Overweight rating on the shares, highlighting the company’s organic sales growth.
In Q3, Renaissance Technologies is the leading shareholder of Cable One, Inc. (NYSE:CABO), owning shares worth $232.4 million. Overall, by the end of Q2 2021, 20 hedge funds tracked by Insider Monkey held stakes in the company, valued at $703 million. In the previous quarter, 23 hedge funds had stakes in Cable One, Inc.(NYSE:CABO), valued at $694.5 million.
8. Discovery, Inc. (NASDAQ:DISCA)
Number of Hedge Fund Holders: 44
Discovery, Inc. (NASDAQ:DISCA), an American multinational mass media company, launched its digital streaming services Discovery+, owing to its importance in the current times. The company is set to bring its streaming services to Canada, which would feature over 200 exclusive content series, making it one of the best media stocks to buy now.
In Q2, Discovery, Inc. (NASDAQ:DISCA) reported a 12% increase in its total U.S. networks revenue at $1.97 billion. The company posted a GAAP EPS of $1.01, beating the estimates by $0.50. In October, Barclays kept an Equal Weight rating on Discovery, Inc. (NASDAQ:DISCA), with a $30 price target.
At the end of Q2, 44 hedge funds tracked by Insider Monkey reported owning stakes in Discovery, Inc. (NASDAQ:DISCA).
Discovery, Inc. (NASDAQ:DISCA) is one of the notable media stocks to invest in, like Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), Netflix, Inc. (NASDAQ:NFLX), The Walt Disney Company (NYSE:DIS), and Comcast Corporation (NASDAQ:CMCSA).
Silver Ring Value Partners mentioned Discovery, Inc. (NASDAQ:DISCA) in its Q2 2021 investor letter. Here is what the firm has to say:
“I established a medium position in Discovery, Inc. (NASDAQ: DISCK) stock during the quarter by means of selling the put options as I described in the last quarterly letter. The stock continued to decline in a way that I found hard to explain by fundamental factors, and the gap between price and value became quite attractive. When the put options expired I chose to keep the amount of stock roughly equal to a 10% position. My entry point was approximately 57% of my Base Case value and at approximately 8x normalized EPS for a business that I believe has the ability to grow profits at a moderate rate.
During the quarter, the company announced its plans to acquire the Warner Media business from AT&T. The transaction is structured as an all-equity deal, is expected to close in approximately a year, and Discovery’s CEO is slated to be the CEO of the combined business. The company expects to produce at least $3B in annual cost synergies without impacting content production investments.
The best way to think about the transaction is that Discovery is acquiring a strong and unique asset without paying a premium. The way that acquisitions usually work is that the buyer pays a sizable premium to the seller which frequently transfers most of the value of the synergies to the seller. In this case, the seller, AT&T, was in a difficult position. Essentially they were a forced seller, having taken on too much debt and under pressure from activist investors to simplify the portfolio. As a result, the equity ownership split between Discovery, Inc. (NASDAQ: DISCK)’s shareholders and AT&T approximates the share of pre-synergy profits contributed by the two entities, which implies no meaningful premium paid.
The acquisition has its share of risks. A few come to mind:
- Integration risk of two…[read the rest of the letter here]
7. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 51
DISH Network Corporation (NASDAQ:DISH) is an American satellite television company. This September, Pivotal Research appreciated the efforts of DISH Network Corporation (NASDAQ:DISH) in deploying 5G networks to expand its reach. The firm lifted its price target on the stock to $65, with a Buy rating on the shares.
At the end of June 2021, 51 hedge funds tracked by Insider Monkey were bullish on DISH Network Corporation (NASDAQ:DISH), the same as in the previous quarter. The total value of these stakes is over $2.5 billion, up from $2.2 billion in the previous quarter. With nearly 19 million shares, Eagle Capital Management is the leading shareholder of DISH Network Corporation (NASDAQ:DISH).
ClearBridge Investments mentioned DISH Network Corporation (NASDAQ:DISH) in its Q2 2021 investor letter. Here is what the firm has to say:
“Portfolio holdings in the communication services and financials sectors also made strong contributions. Dish Network continues to make progress on the buildout of its greenfield 5G network, with Las Vegas slated to become the first market launched later this year. The company gained credibility, and its stock reacted favorably, after it announced a partnership with Amazon to deploy a 5G cloud-native network using AWS’s cloud infrastructure. While the stock has been volatile in recent quarters, we continue to feel confident in Dish’s long-term prospects, which include competing as a fourth U.S. wireless carrier. Charter Communications has been executing well and benefiting from the growth in residential broadband, which has been accelerated by COVID-19 and should see further support from the Biden Administration’s infrastructure bill, which earmarks $65 billion for broadband buildout. In addition, we expect the company to continue to grow its wireless business, leveraging its mobile virtual network operator (MVNO) relationship with Verizon. The company continues to generate strong and growing free cash flow and deploys it toward consistent and material share buybacks.”
6. ViacomCBS Inc. (NASDAQ:VIAC)
Number of Hedge Fund Holders: 71
ViacomCBS Inc. (NASDAQ:VIAC), an American mass media company, operates one of the four broadcast networks in the U.S. The company recently rebranded Paramount+, which will combine the content from Viacom, Paramount, and CBS, for the convenience of its subscribers.
On October 6, ViacomCBS Inc. (NASDAQ:VIAC) declared a quarterly dividend of $0.24 per share. The stock’s current dividend yield stands at 2.45%. The company’s dividend payout ratio stands at 22.86%. This August, Wells Fargo lifted its price target on ViacomCBS Inc. (NASDAQ:VIAC) to $65, while upgrading the stock to Overweight.
At the end of Q2, 71 hedge funds tracked by Insider Monkey reported having stakes in ViacomCBS Inc. (NASDAQ:VIAC).
Click to continue reading and see 5 Best Media Stocks To Buy Now.
Suggested articles:
- 15 Richest Media Owners in the World
- 20 Best Social Media Apps in 2021
- 21 Most Popular Social Media Platforms in 2021
Disclosure. None. 10 Best Media Stocks To Buy Now is originally published on Insider Monkey.
