In this article, we discuss the 5 streaming stocks to buy now. If you want to read our detailed analysis of these stocks, go directly to Forget Netflix: 10 Streaming Stocks to Buy Now.
5. Comcast Corporation (NASDAQ: CMCSA)
Number of Hedge Fund Holders: 88
Comcast Corporation (NASDAQ: CMCSA) is a Pennsylvania-based media and technology company. It is ranked fifth on our list of 10 streaming stocks to buy now. The firm has stakes in several businesses, including web-based streaming through the Xfinity brand. On July 29, the firm posted earnings for the second quarter, reporting earnings per share of $0.84, beating market estimates by $0.17. The revenue over the period was $28 billion, up 20% year-on-year and beating market predictions by $1.3 billion.
On July 30, investment advisory Morgan Stanley maintained an Overweight rating on Comcast Corporation (NASDAQ: CMCSA) stock and raised the price target to $72 from $70, noting the earnings beat of the firm in the second quarter and potential for faster growth in the future.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Eagle Capital Management is a leading shareholder in Comcast Corporation (NASDAQ: CMCSA) with 38 million shares worth more than $2 billion.
In its Q1 2021 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Comcast Corporation (NASDAQ: CMCSA) was one of them. Here is what the fund said:
“Comcast is the Largest cable provider in the U.S. and is the dominant internet access provider in the markets it serves. Though Comcast will likely see further declines in cable subscriptions due to ongoing cord-cutting, it should be able to off set that lost revenue by growing internet access customers and instituting higher pricing. The pandemic has increased the importance of a fast internet connection, with more content streaming to homes at increasingly higher quality. Comcast made significant upgrades early on, allowing it to quickly deploy new technology and increase speeds to meet the evolving needs of its customers.”
4. ViacomCBS Inc. (NASDAQ: VIAC)
Number of Hedge Fund Holders: 89
ViacomCBS Inc. (NASDAQ: VIAC) is placed fourth on our list of 10 streaming stocks to buy now. The company operates as a media and entertainment firm. It is based in New York. The firm owns and runs a number of television networks and has recently launched the Peacock streaming service for internet users. The platform has crossed a user base of 50 million, out of which 10 million are premium subscribers. The firm recently beat market expectations on revenue for the second quarter.
On May 20, investment advisory Bank of America upgraded ViacomCBS Inc. (NASDAQ: VIAC) stock to Buy from Underperform and raised the price target to $53 from $38, noting that there might be media consolidation in the coming months as streaming players seek increased scale.
At the end of the first quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in ViacomCBS Inc. (NASDAQ: VIAC), up from 44 the preceding quarter worth $919 million.
3. Apple Inc. (NASDAQ: AAPL)
Number of Hedge Fund Holders: 127
Apple Inc. (NASDAQ: AAPL) is ranked third on our list of 10 streaming stocks to buy now. The firm operates from California and operates as a technology firm with stakes in several businesses, including streaming. The Apple TV+ brand of the technology giant was launched in 2019 and has already crossed 40 million users by the end of 2020. The company has a market cap of over $2.4 trillion and posted $274 billion in revenue last year. It recently beat market estimates on earnings for the second quarter.
On July 28, investment advisory Loop Capital reiterated a Buy rating on Apple Inc. (NASDAQ: AAPL) stock and raised the price target to $165 from $150, highlighting that the firm had delivered a second consecutive quarter of material upside across the board.
At the end of the first quarter of 2021, 127 hedge funds in the database of Insider Monkey held stakes worth $130 billion in Apple Inc. (NASDAQ: AAPL), down from 146 in the preceding quarter worth $142 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ: AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
2. The Walt Disney Company (NYSE: DIS)
Number of Hedge Fund Holders: 134
The Walt Disney Company (NYSE: DIS) is a California-based mass media and entertainment firm. It is placed second on our list of 10 streaming stocks to buy now. The company operates in the streaming industry through the Disney+ platform that was launched in 2019 and has already crossed 103 million users, firmly cementing its place in the industry as one of the fastest-growing streaming services. The company has a market cap of $321 billion and posted $65 billion in revenue last year.
On June 10, investment advisory Wolfe Research maintained an Outperform rating on The Walt Disney Company (NYSE: DIS) stock with a price target of $226, underlining that the risk/reward ratio of the firm was favorable for investors.
At the end of the first quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $12.5 billion in The Walt Disney Company (NYSE: DIS), down from 144 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE: DIS) was one of them. Here is what the fund said:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that “we view Disney theme parks in the US, Europe, and China as resistant to online substitution.” We did not reckon on a pandemic, which closed all of them, and sent all of usto our couches. Disney, however, wasready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
1. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) is a Washington-based technology company. It is ranked first on our list of 10 streaming stocks to buy now. In addition to providing streaming providers with cloud backup services through the Amazon Web Services platform, the firm has also set up its own streaming service branded Amazon Prime Video. The service has a user base of more than 112 million. The firm has a market cap of 1.6 trillion and posted more than $386 billion in revenue last year.
On June 30, investment advisory Stifel maintained a Buy rating on Amazon.com, Inc. (NASDAQ: AMZN) stock with a price target of $4,400, noting that the second quarter earnings shortfall for the firm was contained in online stores which were the lowest multiple in the business.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ: AMZN) with 3.3 million shares worth more than $10.5 billion.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ: AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN): We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment: 1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is in a much different place than when we initially invested. Back in 2014, investors were starting to question whether Amazon’s promise of future earnings potential would actually come to fruition.
Operating income had declined from ~$1.4BN in 2010, to ~$676M in 2012, to just ~$178M by the end of 2014. Expenses were outpacing revenue growth, and investors were questioning whether Amazon’s expenses were truly “investments” as they claimed, or whether it was a structural necessity of the business and thus would never flow to investor’s bottom line.
The critical question was ‘what portion of expenses are truly growth investments vs. structural expenses, and as a result, will Amazon ever be capable of generating significant profits?’
Our analysis indicated that these expenditures truly were the former, and led to the belief that the business’ structural margins would inevitably increase over time. This was our differentiated insight / investment edge.
Fast-forward to today, and our thesis proved correct with operating margins having increased from ~0.2% to ~6%. However due to this success and proving this facet out to investors, Amazon investors have much higher confidence and a better understanding of the company today. I’m not sure we have the same level of differentiated insights, as we did back then.
In addition, I believe the departure of Jeff Bezos and his long-time lieutenants signal a regime change. Perhaps it’s now “Day 1.5” instead of the Day 1 mentality that made Amazon so successful (LINK)… The departures within the past couple years include:
- Jeff Bezos – Founder, CEO, Visionary. Started Amazon in 1994.
- Jeff Blackburn – Joined Amazon in 1998. Oversaw Amazon Marketplace, Advertising,
Amazon Studios, Prime Video, Prime Music, M&A.
- Jeff Wilke – Joined Amazon in 1999. Oversaw Amazon Consumer (ecommerce)
business.
- Steve Kessel – Joined Amazon in 1999. Oversaw Physical Stores, Kindle, and Whole
Foods.
Blackburn, Wilke, and Kessel have each arguably created hundreds of billions of shareholder value. On top of this, Bezos is the visionary and culture-setter behind Amazon. When he and his long-time lieutenants take their hands off the wheel, it is probably time for us to as well.
We sold our remaining shares at an average price of ~$3,240. Based on our initial investment, we made a ~10x return in a little over six years, for a ~45% IRR7. We reinvested the proceeds into our existing portfolio, taking advantage of the prices offered by this latest market draw-down.”
You can also take a peek at 10 Companies that Benefit From Crypto Mining and 10 Best Stocks to Buy According to Steven Baughman’s Divisar Capital.
