In this article, we will be taking a look at the 12 best media stocks to buy now. To skip our detailed analysis of these stocks, you can go directly to see the 5 Best Media Stocks To Buy Now.
Over the past few years, the media industry has undergone a fair amount of change. One major trend observed, particularly post-pandemic, is that of a growing interest in the streaming video industry. As a result, traditional media in the form of newspapers, TV channels, and more is beginning to be replaced by online streaming. With the rise of the streaming video industry, media producers are beginning to face overwhelming pressure to keep producing engaging content and get it in front of their target audiences. According to a Deloitte report on the media sector’s outlook for 2022, in the US, the rate at which people add and cancel paid streaming services averaged around 35% in 2022. This rate of subscription churn is only one factor pressuring media producers to keep putting out hit content and stay on top of their game in an ever-evolving industry.
Traditional media companies like Warner Bros. Discovery Inc. Series A (NASDAQ:WBD) and Paramount Global Class B (NASDAQ:PARA), alongside newer, less conventional media companies such as Netflix, Inc. (NASDAQ:NFLX), are finding themselves embroiled in this new and transformative sector. However, these companies are also finding themselves in a better position in the media industry due to global conditions improving. According to a PwC report on the Global Entertainment & Media Outlook for 2022-2026, the entertainment and media industry has seen an improvement from its contraction in 2020 to resume its growth path. Revenues for the industry rose by 10.4% in 2021. Additionally, the report forecasts that by 2026, the entertainment and media industry will also approach about $3 trillion in revenues.
The report envisions the media industry to be a $2.9 trillion market by 2026, one that is more digital, mobile, and pitched at media targeting the younger generations. Between 2022 and 2026, the industry’s revenue is expected to grow at a compound annual growth rate of 4.6%. Additionally, the report observed a pattern of growing digitization of the entertainment and media industry, a trend that can mean greater profitability for the industry as it works to fit into a newer, more tech-savvy market. In 2021, advertising grew by 22.6%, representing a 32.3% growth in total industry revenues. This growth is largely fed by digital advertisements and their growing popularity within the media industry.
Let’s now take a look at the 12 best media stocks to buy now.
Photo by Myke Simon on Unsplash
Our Methodology
We have selected traditional and new media stocks for our list below, based on a range of factors representing their growth potential. Some of these factors include the companies’ revenue growth over the past quarters, their gross margins, adjusted EBITDA growths, and analyst price targets and ratings. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest.
Best Media Stocks To Buy Now
12. Digital Media Solutions, Inc. (NYSE:DMS)
Number of Hedge Fund Holders: 6
Digital Media Solutions, Inc. (NYSE:DMS), a communication services company, is based in Clearwater, Florida. It offers a software delivery platform in the US. The company operates through its Brand Direct, Marketplace, and Other segments.
The company had revenue of $90.1 million in the third quarter, and it ended the quarter with $18.3 million in cash and cash equivalents. For the fourth quarter, Digital Media Solutions, Inc. (NYSE:DMS) has forecasted a net revenue of $97-$102 million, a gross margin of 25-30%, and an adjusted EBITDA of $7-$10 million.
Six hedge funds were long Digital Media Solutions, Inc. (NYSE:DMS) in the third quarter, with a total stake value of $1.5 million.
Digital Media Solutions, Inc. (NYSE:DMS), like Warner Bros. Discovery Inc. Series A (NASDAQ:WBD), Paramount Global Class B (NASDAQ:PARA), and Netflix, Inc. (NASDAQ:NFLX), is a media stock that is beginning to catch investor attention this year.
11. IMAX Corporation (NYSE:IMAX)
Number of Hedge Fund Holders: 14
IMAX Corporation (NYSE:IMAX) is another communication services company on our list. It offers a cinematic solution through proprietary software, theater architecture, intellectual property, and specialized equipment. The company is based in Mississauga, Ontario.
Michael Pachter at Wedbush reiterated an Outperform rating on IMAX Corporation (NYSE:IMAX) shares on November 11, alongside a $20 price target.
IMAX Corporation (NYSE:IMAX) had a decidedly positive net income between 2010 and 2020. The company is embarking on an aggressive share buyback strategy which seems positive in light of its current valuation. As of this October, the company had spent $175 million on share buybacks between 2017 and 2022, roughly equivalent to 15% of its outstanding shares. IMAX Corporation (NYSE:IMAX) is also in a position to accelerate the pace of its buybacks in the coming months.
Nantahala Capital Management was the largest stakeholder in IMAX Corporation (NYSE:IMAX) in the third quarter, holding 2.7 million shares worth $38.2 million. In total, 14 funds were long the stock, with a total stake value of $132 million.
10. The Marcus Corporation (NYSE:MCS)
Number of Hedge Fund Holders: 20
The Marcus Corporation (NYSE:MCS) owns and operates movie theaters, hotels, and resorts in the US. The company is based in Milwaukee, Wichita. It operates through its Theatres, and Hotels & Resorts segments. Riley’s Eric Wold holds a Buy rating on The Marcus Corporation (NYSE:MCS) shares as of December 5.
The Marcus Corporation (NYSE:MCS) is the owner of the fourth-largest theatre chain in the US, making it a huge beneficiary of the 69% recovery in theatre attendance since 2019 levels. The company’s hotel business has also returned to normal post-pandemic, with comparable revenues in the second quarter reaching about 99% of 2019 levels. Analysts expect The Marcus Corporation (NYSE:MCS) to return to profitability in 2023 with revenues of $767 million and $0.70 in EPS.
The Marcus Corporation (NYSE:MCS) was found among the 13F holdings of 20 funds in the third quarter, with a total stake value of $52.4 million.
9. Fox Corporation (NASDAQ:FOX)
Number of Hedge Fund Holders: 22
Fox Corporation (NASDAQ:FOX) is a news, sports, and entertainment company based in the US. The company operates through its Cable Network Programming, Television, and Other, Corporate, and Elimination segments.
As of this September, Fox Corporation (NASDAQ:FOX) had managed to deliver close to double-digit revenue growth rates, a feat that is impressive for a media company. The company also had low debt, with a 39.4% debt/Cap. Fox Corporation (NASDAQ:FOX) also has the ability to expand its customer base and reach about 39% of American households with its television station. The company’s revenue was up by 7% as of June 30, with advertising rising by nearly double-digits for 2022.
Out of the 22 hedge funds long Fox Corporation (NASDAQ:FOX) in the third quarter, Yacktman Asset Management was the largest stakeholder, holding 8.6 million shares worth $246.5 million. There were 22 hedge funds in total long the stock, with a total stake value of $489 million.
8. World Wrestling Entertainment, Inc. (NYSE:WWE)
Number of Hedge Fund Holders: 27
World Wrestling Entertainment, Inc. (NYSE:WWE) is an integrated media and entertainment company based in Stamford, Connecticut. The company engages in the sports entertainment business in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. It operates through its Media, Live Events, and Consumer Products segments.
Benjamin Swinburne holds an Equal Weight rating and $80 price target on World Wrestling Entertainment, Inc. (NYSE:WWE) shares as of November 29.
On valuation, World Wrestling Entertainment, Inc. (NYSE:WWE) showed per-share profit growth in the third quarter. It was also positive for 2022 and 2023. The company is a $5.4 billion market cap entertainment corporation that has been outperforming the broader communications sector in 2022 so far.
World Wrestling Entertainment, Inc. (NYSE:WWE) had 27 funds long its stock in the third quarter. Their total stake value was $357 million.
ClearBridge Investments, an investment management firm, mentioned World Wrestling Entertainment, Inc. (NYSE:WWE) in its first-quarter 2021 investor letter. Here’s what the firm said:
“We also sold World Wrestling Entertainment as we believe the shares reflected full value after finally signing a U.S. content distribution agreement.
World Wrestling Entertainment, Inc. (NYSE:WWE), like Warner Bros. Discovery Inc. Series A (NASDAQ:WBD), Paramount Global Class B (NASDAQ:PARA), and Netflix, Inc. (NASDAQ:NFLX), is an upcoming media stock many elite hedge funds are interested in today.
7. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 32
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company. The company focuses on the acquisition, development, and operation of television stations and interactive community websites, and digital media services in the US. It is based in Irving, Texas.
An Outperform rating was reiterated on Nexstar Media Group, Inc. (NASDAQ:NXST) shares on November 11 by James Goss at Barrington. The analyst also placed a $200 price target on the stock.
In the third quarter, Nexstar Media Group, Inc. (NASDAQ:NXST) saw growth in its diluted EPS from $3.90 in the third quarter of 2021 to $7.30 in the same quarter this year. The company’s distribution revenue also grew by 5.3% on a nine-month basis compared to the same period in 2021. Nexstar Media Group, Inc. (NASDAQ:NXST) also saw its long-term debt-to-total assets ratio decrease from 0.6 in December 2019 to $0.5 in December 2021.
Cardinal Capital was the largest stakeholder in Nexstar Media Group, Inc. (NASDAQ:NXST) in the third quarter, holding 965,922 shares worth $161.2 million. A total of 32 funds were long the stock, with a total stake value of $685 million.
6. DISH Network Corporation (NASDAQ:DISH)
Number of Hedge Fund Holders: 40
DISH Network Corporation (NASDAQ:DISH) is a provider of pay-TV services in the US. The company is based in Englewood, Colorado, and operates through its Pay-TV and Wireless segments. It offers video services under the DISH TV brand and programming packages including programming through national broadcast networks, local broadcast networks, and national and regional cable networks.
On November 4, Michael Rollins at Citigroup reiterated a Buy rating on DISH Network Corporation (NASDAQ:DISH), alongside placing a $33 price target on the stock.
In the third quarter, the company had revenues of $4.1 billion and an operating income of $427 million. It beat subscriber estimates of 9.8 million and 2.3 million to Sling by about 30,000 with over 10 million total subscribers.
According to Bank of America Global Research, DISH Network Corporation (NASDAQ:DISH) provided television services to about 12 million customers in the US as of this August.
Our hedge fund data shows 40 funds long DISH Network Corporation (NASDAQ:DISH) in the third quarter, with a total stake value of $776 million.
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Disclosure: None. 12 Best Media Stocks To Buy Now is originally published on Insider Monkey.