We recently compiled a list of the 6 Undervalued Entertainment Stocks To Buy Right Now. In this article, we are going to take a look at where Endeavor Group Holdings Inc. (NYSE:EDR) stands against the other undervalued entertainment stocks.
Entertainment stocks provide interesting investment opportunities. Unlike many other businesses, these companies allow the retail investor to have some association with the company that makes them feel a part of it. For example, Disney was a big part of many people’s childhood. Owning the company’s stock is often a way for them to not only honor the company but also feel a part of the company rather than just a viewer of its content.
At the same time, these stocks can also be prone to ups and downs, largely dependent on how the public perceives the content they make. If the content is loved, the company makes money and the stock goes up. If it doesn’t receive a good response from the public, the company can’t make enough money, resulting in a stock price decline. Regulatory risks, innovative technologies, and high production costs continue to plague the sector. However, these issues often bring the stock down to levels where investors would love to take a position in the stock.
We look at 6 such companies that are trading at a low valuation and are a steal at these levels. To come up with our list of 6 undervalued entertainment stocks, we considered stocks with a price-to-book value of below 3.0 and a market cap between $5 billion and $30 billion.
A crowd of sports fans watching a live match, dressed in the colors of the owned sports properties.
Endeavor Group Holdings Inc. (NYSE:EDR)
Endeavor Group Holdings Inc. is a leading sports and entertainment company that operates through events, experiences & rights, owned sports properties, sports data & technology, and representation segments. The company’s investment thesis revolves around one of its holdings, the TKO Group, which it has a 51% stake in.
Last year, there were rumors of the company going private but the arbitrage opportunity resulting from that transaction disappeared as the stock moved closer to the $30 mark. There is still reason to buy this stock though. The company’s stake in TKO Group is the ultimate value as the popularity of WWE and UFC doesn’t seem to be fading anytime soon. On top of that, Saudi Arabia’s interest in the fighting industry means the firm is a buyout target as well, though at this stage that is just speculation.
The company continues to trade at a lower valuation because holding companies often do so. However, due to the nature of their business and potential buyout, we consider it an undervalued company and one worth investing in.
Overall EDR ranks 6th on our list of the undervalued entertainment stocks to buy right now. While we acknowledge the potential of EDR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as EDR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
