5 Best Entertainment Stocks To Buy In 2023

In this article, we discuss 5 best entertainment stocks to buy in 2023. If you want to see more stocks in this selection, check out 12 Best Entertainment Stocks To Buy In 2023. 

5. Six Flags Entertainment Corporation (NYSE:SIX)

Number of Hedge Fund Holders: 40

Six Flags Entertainment Corporation (NYSE:SIX) owns and operates local amusement and aqua parks under the Six Flags label. These parks provide a variety of rides, aquatic attractions, themed sections, live performances and spectacles, dining establishments, gaming areas, and stores. It is one of the best entertainment stocks to invest in. 

On April 20, Morgan Stanley analyst Thomas Yeh initiated coverage of Six Flags Entertainment Corporation (NYSE:SIX) with an Equal Weight rating and a price target of $29. The analyst believes that the regional theme parks run by Six Flags are profitable enterprises, with per-share growth in double-digit levered free cash flow. He views the group as having an appealing risk-to-reward ratio, given that its valuation is “well below pre-pandemic levels,” even compared to other consumer sectors. Yeh added that the firm’s positive industry outlook is due to its unique brands, high entry barriers, and complementary footprints. However, the firm recognizes both opportunities and risks stemming from Six Flags Entertainment Corporation (NYSE:SIX)’s recent strategic reset, which could lead to potential growth.

According to Insider Monkey’s fourth quarter database, 40 hedge funds were bullish on Six Flags Entertainment Corporation (NYSE:SIX), compared to 35 funds in the prior quarter. Rehan Jaffer’s H Partners Management is the largest stakeholder of the company, with 11.40 million shares worth $265 million. 

Here is what Merion Road Capital specifically said about Six Flags Entertainment Corporation (NYSE:SIX) in its Q3 2022 investor letter:

“I am actively looking for new ideas and started dipping my toe in Six Flags Entertainment Corporation (NYSE:SIX). SIX is another turnaround situation. Unlike PTON, SIX is backed by hard assets and has a history of stable earnings. New management is looking to grow EBITDA to $700mm vs. the $525mm range over the past several years, covid aside. Their strategy is to effectively reduce traffic and increase price, while prioritizing capital spend on high return projects. Results have admittingly been mixed so far. But even assuming no benefit from the new initiatives, the company is trading at a reasonable valuation of 11x EBIT.”

4. Live Nation Entertainment, Inc. (NYSE:LYV)

Number of Hedge Fund Holders: 43

Live Nation Entertainment, Inc. (NYSE:LYV) is a live entertainment company that operates through Concerts, Ticketing, and Sponsorship & Advertising segments. It is one of the best entertainment stocks to watch. The company’s Q4 revenue of $4.29 billion climbed 58.9% on a year-over-year basis, beating Wall Street estimates by $680 million.

On March 22, Eric Handler, an analyst at Roth MKM, started coverage of Live Nation Entertainment, Inc. (NYSE:LYV) with a Neutral rating and a $72 price target. The analyst acknowledged that the live events industry is enjoying positive trends and that Live Nation Entertainment, Inc. (NYSE:LYV) has ample potential for global expansion, which could result in a compound annual growth rate of 10% for operating income over the next four years, leading to more than $4 billion in free cash flow. However, the firm cautioned that in the short term, there may be limited capital appreciation for Live Nation Entertainment, Inc. (NYSE:LYV) shares, as it is concerned about economic pressures that could affect consumer spending in the latter half of 2023, as well as potential government intervention that could impact the company.

According to Insider Monkey’s fourth quarter database, 43 hedge funds were long Live Nation Entertainment, Inc. (NYSE:LYV), compared to 48 funds in the earlier quarter. Select Equity Group is the largest stakeholder of the company, with 10.65 million shares worth $742.7 million. 

Here is what Carillon Tower Advisers specifically said about Live Nation Entertainment, Inc. (NYSE:LYV) in its Q2 2022 investor letter:

“Live Nation Entertainment, Inc. (NYSE:LYV) fell as economic worries gathered during the quarter and as a new wave of the pandemic gained steam. As this company also promotes concerts and shows in Europe and Latin America, economic worries in these regions may have weighed on sentiment. We are encouraged by very strong pent-up demand potential for concerts and shows following the pandemic.”

3. Sea Limited (NYSE:SE)

Number of Hedge Fund Holders: 48

Sea Limited (NYSE:SE) is involved in the digital entertainment, e-commerce, and digital financial services industries. The company provides the Garena digital entertainment platform, which allows users to access mobile and PC online games, as well as eSports operations. On March 7, Sea Limited (NYSE:SE) reported a Q4 non-GAAP EPS of $0.72 and a revenue of $3.45 billion, topping Wall Street estimates by $1.27 and $400 million, respectively. It is one of the best entertainment stocks to invest in. 

On April 20, Benchmark initiated coverage of Sea Limited (NYSE:SE) with a Buy rating and a $105 price target as part of the firm’s industry launch of Southeast Asia e-commerce stocks. The analyst highlighted that Sea Limited (NYSE:SE) is a leading platform provider that offers gaming via Garena, e-commerce via Shopee, and fintech services through SeaMoney. The firm’s positive view is based on the belief that the growth of Shopee and SeaMoney will continue to benefit from favorable structural factors. Additionally, the firm noted that Sea Limited (NYSE:SE) delivered impressive profitability in Q4, which was one year ahead of its guided timeline, and this further supports the positive outlook.

According to Insider Monkey’s fourth quarter database, 48 hedge funds were long Sea Limited (NYSE:SE), compared to 55 funds in the last quarter. Nitin Saigal and Dan Jacobs’ Kora Management is the largest stakeholder of the company, with approximately 4 million shares worth $206.8 million. 

Artisan Developing World Fund made the following comment about Sea Limited (NYSE:SE) in its Q1 2023 investor letter:

“Top contributors to performance for the quarter included Southeast Asian e-commerce platform Sea Limited (NYSE:SE). Sea rose after achieving profitability in e-commerce a year ahead of guidance, and delivering significant growth in monetization and revenue despite moderating gross merchandise value (GMV) trends. Notably, our top four holdings entering the quarter (Sea, Meli, Nvidia, Airbnb) which represented 24.37% of capital on December 31, 2022, increased an average of 64.42% during the quarter.”

2. Caesars Entertainment, Inc. (NASDAQ:CZR)

Number of Hedge Fund Holders: 61

Caesars Entertainment, Inc. (NASDAQ:CZR) is a gaming and hospitality company in the US that owns or manages properties with slot machines, table games, and hotel rooms, as well as offering sports wagering across multiple North American jurisdictions through both retail and online channels. The company also provides dining, entertainment, staffing, and management services. It is one of the best entertainment stocks to invest in. 

On February 22, JPMorgan analyst Joseph Greff increased the firm’s price target for Caesars Entertainment, Inc. (NASDAQ:CZR) from $67 to $69 and maintained an Overweight rating on the shares. The analyst noted that the Q4 earnings report did not bring any surprises, as the positive pre-announcement last month had already set the expectations. Looking forward, the firm’s estimates for the land-based casinos in Las Vegas and Regional for 2023 and 2024 remain unchanged. According to the analyst, Caesars Entertainment, Inc. (NASDAQ:CZR) will continue to have momentum in Las Vegas, digital operations, and free cash flow.

According to Insider Monkey’s fourth quarter database, 61 hedge funds were long Caesars Entertainment, Inc. (NASDAQ:CZR), compared to 56 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a significant position holder in the company, with 1.5 million shares worth nearly $63 million. 

Here is what Carillon Eagle Mid Cap Growth Fund has to say about Caesars Entertainment, Inc. (NASDAQ:CZR) in its Q4 2021 investor letter:

“Caesars Entertainment, a diversified casino-entertainment and resort company, underperformed in the period as its quarterly earnings update was viewed as disappointing by investors. The firm highlighted a number of one-time headwinds that ultimately weighed on margins, as well as some negative impacts brought on by the surge in COVID cases. Despite this, we believe that the sizable overall margin improvements Caesars has realized coming out of the pandemic will ultimately prove sustainable in the long run.”

1. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 99

The Walt Disney Company (NYSE:DIS) is an entertainment company worldwide that operates through two segments, Disney Media and Entertainment Distribution; and Disney Parks, Experiences and Products. It is one of the best entertainment stocks to invest in. On February 8, during the earnings conference call, CEO Bob Iger confirmed that The Walt Disney Company (NYSE:DIS)’s plans involve laying off 7,000 workers. The announcement followed an earnings beat that resulted in an increase in the company’s stock price after hours. Iger also mentioned the possibility of restoring Disney’s dividend this year. 

On April 18, Deutsche Bank analyst Bryan Kraft raised the firm’s price target on The Walt Disney Company (NYSE:DIS) to $135 from $130 and maintained a Buy rating on the shares. Kraft believes that the shares offer an attractive opportunity in the second half of 2023. He expects that The Walt Disney Company (NYSE:DIS)’s fiscal Q3 will be a turning point, with the company transitioning from three quarters of earnings declines to sustained positive earnings growth. The firm also expects Disney’s cost reduction initiatives to have a positive impact, resulting in an improvement in loss in Streaming and smaller year-over-year operating income declines in Linear Networks. Deutsche sees the possibility of a multiple re-rating higher since the shares are trading in-line with the S&P 500 Index at 19-times earnings.

According to Insider Monkey’s fourth quarter database, 99 hedge funds were bullish on The Walt Disney Company (NYSE:DIS), compared to 112 funds in the last quarter. Nelson Peltz’s Trian Partners is the largest stakeholder of the company, with 9 million shares worth $784.5 million. 

VGI Partners made the following comment about The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter:

“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.

Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.

Disney is currently undergoing a business transition within the Media and Entertainment Distribution division (DMED) from traditional media property distribution via third parties (i.e. cinemas and broadcast networks) to a Direct-To-Consumer (DTC) model via the Disney+ streaming service. A key element of our thesis is that the earnings power of the company is currently being masked by the marketing and content investments within Disney+ and that this will normalise over the next several years. To put this in perspective, Disney+ (DTC sub-segment) currently generates operating losses of over US$3.3bn (a negative 14% operating margin) compared to operating margins at its nearest streaming competitor, Netflix, of +15.5%…” (Click here to read the full text)

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