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Entertainment stocks were back in the spotlight this week when Warner Bros. Discovery (WBD) announced it was splitting itself into two separate companies, just three years after it was created through a merger of AT&T (T) spinoff WarnerMedia and Discovery.
The Walt Disney Company (DIS) also made news, announcing on Monday that it had bought the remaining stake in streaming service Hulu that it didn’t already own from Comcast (CMSCA) for $439M.
Given the recent movement in the entertainment space, we asked Seeking Alpha analysts Gen Alpha and The Value Pendulum which stocks they favored in the sector.
Gen Alpha: Comcast (NASDAQ:CMCSA) is my top pick in the media space. It has a vast array of media assets combined with connectivity and burgeoning theme park businesses.
The market seems to be assigning a complexity discount and appears to be overly rotated on losses in broadband subscribers. However, Comcast (NASDAQ:CMCSA) still managed to grow its adjusted EBITDA last quarter and repurchased 5% of its shares during the first quarter alone.
I believe the sum of Comcast’s (CMCSA) parts are worth far more than where the share price is trading at today. In the meantime, investors get a decent dividend yield on this undervalued stock.
The Value Pendulum: IMAX Corporation (NYSE:IMAX) has good topline expansion and margin improvement potential, with foreign markets having a lot of promise. For example, the IMAX theater network penetration in a populated nation like India is under 30%. Also, the company can enjoy fixed-cost leverage effects if its theater utilization rises. That is achievable with the increased screening of alternative content such as live sports.
More on Comcast, IMAX
- IMAX China: Industry Prospects And Share Repurchases Are Key Investment Considerations
- Comcast: A Telecom Giant Evolving Into A Digital Ecosystem
- Comcast’s Cash Cow Makes It One Of The Best Prospects On The Market
- Walt Disney closes deal to fully acquire Hulu
- ‘Lilo & Stitch’ leads quiet weekend as box office slows into summer