In this article, we will take a look at the 12 best entertainment stocks to buy for 2024.
The entertainment industry is further divided into sub-industries including movies and entertainment, which includes companies focused on production and distribution of movies and television shows, and Interactive Home Entertainment, which includes producers of educational and interactive gaming products.
Studios and video streaming services must deal with the challenge of market disruption. As per Deloitte, companies in the media and entertainment industries are not only vying against each other for audience attention, time, and revenue, but also against social media, user-generated content, and video games. The latter have advanced more rapidly and have remained popular among younger age groups. You can read more about this in our article: 12 Best Entertainment Stocks To Buy In 2023
Recent years haven’t been good for the entertainment industry. Several entertainment industry stocks had to tread through choppy waters due to several reasons. Last year we saw strikes from Hollywood writers and actors which brought content production to a standstill. On the other hand, persistent issues of advertising market weakness and ‘cord-cutting’ continued to burden profitability for the industry participants. For the uninitiated, cord-cutting refers to the behavior of viewers cancelling their subscriptions to multichannel television services available over cable or satellite, in favor of other forms of media services. A new potential threat as well as opportunity has arisen recently in the form of generative artificial intelligence. On the one hand, it can improve productivity, on the other it can raise challenges like trust, accuracy, privacy, and fairness.
Companies in the entertainment industry have been forced to take measures to protect shareholder value in the face of these challenges. Some of the players in the market are reportedly seeking consolidation opportunities in a bid to use scale to fight off adversity. Other industry participants have opted for innovative opportunities to increase revenues and profitability. For instance, the streaming giant Netflix, Inc. (NASDAQ:NFLX) tightened the control on password sharing and introduced advertisement supporting tier of membership at a lower fee to attract the bargain hunters. In addition, companies have slashed their content budgets to improve their profitability.
Our list of 12 best entertainment stocks to buy for 2024 includes some of the most notable names in the entertainment industry. The list includes UFC and WWE operator TKO Group Holdings, Inc. (NYSE:TKO), the leading record label company Warner Music Group Corp. (NASDAQ:WMG), ticketing and live entertainment leader Live Nation Entertainment, Inc. (NYSE:LYV), and the streaming leader, Netflix, Inc. (NASDAQ:NFLX), among others. With the exception of a few, majority of the stocks on the list have a history of paying regular dividends to their shareholders.
Methodology
We scanned Insider Monkey’s database of 933 hedge funds and picked the top 12 companies that operate in the entertainment industry with the highest number of hedge fund investors. We have ranked our picks in ascending order of the number of hedge funds that have positions in them.
Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12. TKO Group Holdings, Inc. (NYSE:TKO)
Number of Hedge Fund Holders: 34
TKO Group Holdings, Inc. (NYSE:TKO) is a premium sports and entertainment company that comprises UFC, the world’s premier mixed martial arts organization, and WWE, an integrated media organization and the recognized global leader in sports entertainment. It is majority owned by Endeavor Group Holdings, Inc. (NYSE:EDR).
On February 14, Morgan Stanley initiated coverage of TKO Group Holdings, Inc. (NYSE:TKO) shares with a price target of $95 and an ‘Equal weight’ rating for the shares. The target price represents a potential upside of 12.48% based on the latest share price.
As of Q4 2023, 34 of the 933 hedge funds tracked by Insider Monkey owned TKO Group Holdings, Inc. (NYSE:TKO) shares valued at a combined total of $853 million.
11. Warner Music Group Corp. (NASDAQ:WMG)
Number of Hedge Fund Holders: 35
Warner Music Group Corp. (NASDAQ:WMG) is a multinational entertainment and record label company operating some of the largest and most famous labels in the world, including Atlantic, Elektra, Parlophone and Warner Records. It is also home to Warner Chappell Music – one of the world’s leading music publishers, with a catalog of more than 1.4 million copyrights.
On February 7, Warner Music Group Corp. (NASDAQ:WMG) released its financial results for three months ended December 31, 2023. Its revenue increased by 17% y-o-y to $1.7 billion, while net income surged 56% y-o-y to $193 million.
The Board of Directors of the company declared a regular quarterly cash dividend of $0.17 per share on February 12. The annualized dividend represents a dividend yield of 1.98%, the second highest on our list of 12 best entertainment stocks to buy for 2024.
10. Fox Corporation (NASDAQ:FOXA)
Number of Hedge Fund Holders: 38
Fox Corporation (NASDAQ:FOXA) produces and distributes news, sports, and entertainment content through its primary iconic domestic brands, including FOX News Media, FOX Sports, FOX Entertainment, FOX Television Stations and Tubi Media Group.
On February 7, Fox Corporation (NASDAQ:FOXA) reported the financial results for the quarter ended December 31, 2023. It generated a revenue of $4.2 billion and a net income of $115 million. Normalized EPS of $0.34 for the quarter surpassed the consensus estimates by $0.22.
Following the earnings release, Citigroup raised the price target for Fox Corporation (NASDAQ:FOXA) shares to $35 from $34 and raised the rating for its shares to ‘Buy’ from ‘Neutral’.
9. News Corporation (NASDAQ:NWSA)
Number of Hedge Fund Holders: 38
New York-based News Corporation (NASDAQ:NWSA) is a global, diversified media and information services company. Its businesses include digital real estate services, subscription video services in Australia, news and information services and book publishing.
On February 7, News Corporation (NASDAQ:NWSA) released its financial results for the quarter ended December 31, 2023. Its revenue increased by 3% y-o-y to $2.6 billion while it generated a net income of $183 million. Its normalized EPS of $0.26 exceeded consensus estimates by $0.05.
According to the Insider Monkey data on 933 leading hedge funds, 38 hedge funds were long News Corporation (NASDAQ:NWSA) shares as of Q4 2023. Donald Yacktman’s Yacktman Asset Management was the largest hedge fund shareholder with ownership of 16.7 million shares valued at $411 million.
8. Atlanta Braves Holdings, Inc. (NASDAQ:BATRK)
Number of Hedge Fund Holders: 40
Atlanta Braves Holdings, Inc. (NASDAQ:BATRK), through its wholly owned subsidiary, is the owner and operator of the Atlanta Braves Major League Baseball Club and the mixed-use real estate development, The Battery Atlanta, and is the operator of the Atlanta Braves Major League Baseball Club’s stadium, Truist Park.
On July 18, Atlanta Braves Holdings, Inc. (NASDAQ:BATRK) completed its split-off from Liberty Media Corporation (NASDAQ:LXSMA). Following that, the company became an independent entity and its shares started trading on the NASDAQ.
As of Q4 2023, Atlanta Braves Holdings, Inc. (NASDAQ:BATRK) shares were held by 40 hedge funds with the total shares held by them valued at $616 million.
7. Paramount Global (NASDAQ:PARA)
Number of Hedge Fund Holders: 43
Paramount Global (NASDAQ:PARA) is a leading global media and entertainment company comprising studios, networks, and streaming services, through a portfolio of brands that includes well-known names such as CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+, Pluto TV and Simon & Schuster, among others.
Paramount Global (NASDAQ:PARA) ranks highest on our list of 12 best entertainment stocks to buy for 2024 based on its dividend yield. Based on the $0.39 per share total dividend paid in 2023, its shares have a dividend yield of 3.52%.
The shares of Paramount Global (NASDAQ:PARA) were owned by 43 hedge funds with a total value of $1.9 billion, as of Q4 2023. Warren Buffett’s Berkshire Hathaway was the largest shareholder among hedge funds with ownership of 63.3 million shares valued at $937 million.
6. Live Nation Entertainment, Inc. (NYSE:LYV)
Number of Hedge Fund Holders: 45
Live Nation Entertainment, Inc. (NYSE:LYV) is a leading live entertainment company comprised of global market leaders: Ticketmaster, Live Nation Concerts, and Live Nation Media & Sponsorship. It
On February 22, Live Nation Entertainment, Inc. (NYSE:LYV) released its Q4 2023 financial results which showed significant growth. Its revenue increased by 36% y-o-y to $5.8 billion while it generated an EPS of -$1.22, $0.18 below consensus estimates.
As of Q4 2023, Live Nation Entertainment, Inc. (NYSE:LYV) shares were held by 45 of the 933 hedge funds tracked by Insider Monkey with the total shares held by hedge funds valued at $2.9 billion. Robert Joseph Caruso’s Select Equity Group was the lead hedge fund shareholder with ownership of 10.5 million shares valued at $979 million.
5. Endeavor Group Holdings, Inc. (NYSE:EDR)
Number of Hedge Fund Holders: 46
Beverly Hills, California-based Endeavor Group Holdings, Inc. (NYSE:EDR) is a global sports and entertainment company specializing in talent representation, sports operations & advisory, event & experiences management, media production & distribution, experiential marketing, and brand licensing.
On October 25, Endeavor Group Holdings, Inc. (NYSE:EDR) announced the initiation of a formal review to evaluate strategic alternatives for the Company. On February 22, Deutsche Bank lowered the price target for Endeavor Group Holdings, Inc. (NYSE:EDR) shares to $32 from $35 and maintained a ‘Buy’ rating. The firm believes that an announcement of a bid from Silver Lake to take the company private will come soon.
Hedge funds are bullish about Endeavor Group Holdings, Inc. (NYSE:EDR) shares as the number of hedge funds that own its shares has increased from 32 in Q1 2022 to 46 in Q4 2023. These hedge funds together held shares worth $3.5 billion according to Insider Monkey data.
4. The Liberty SiriusXM Group (NASDAQ:LSXMK)
Number of Hedge Fund Holders: 48
The Liberty SiriusXM Group (NASDAQ:LSXMA) comprises Liberty Media’s ownership in SiriusXM Holdings Inc. (NASDAQ:SIRI). Liberty Media owns 83.5% of SiriusXM which operates two audio entertainment businesses, SiriusXM and Pandora.
On December 12, Liberty Media announced definitive agreements whereby Liberty Media’s Liberty SiriusXM tracking stock group will be combined with SiriusXM with the new company having a single outstanding series of common stock.
As of Q4 2023, 43 of the 933 prominent hedge funds tracked by Insider Monkey held shares of The Liberty SiriusXM Group (NASDAQ:LSXMA), worth $2.0 billion. Warren Buffett’s Berkshire Hathaway owned 43.2 million shares of the company valued at $1.2 billion.
3. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 56
New York City-based Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a global media and entertainment company. It was formed in April 2022 through the merger of WarnerMedia’s merger with Discovery which combines premium entertainment, sports and news assets with leading non-fiction and international entertainment and sports businesses.
On February 23, Warner Bros. Discovery, Inc. (NASDAQ:WBD) released its financial results for Q4 2023 which failed to meet the consensus estimates for EPS and revenue. The company generated a revenue of $10.3 billion and a normalized EPS of -$0.13, which missed expectations by $0.12.
In its Q3 2023 “Partners Fund” investor letter, Longleaf Partners, managed by Southeastern Asset Management, made the following comments about Warner Bros. Discovery, Inc. (NASDAQ:WBD):
“Media conglomerate Warner Bros Discovery (WBD) declined in the quarter with a combination of the writers’ and actors’ strikes headlines, and a fight between Charter and Disney that led to more concerns about the linear and streaming profit structure. Although both situations actually improved as the quarter went on, both created uncertainty that weighed heavily on the WBD stock price in the near term. The underlying business is executing better, with solid free cash flow generation reported in the quarter that should continue for the foreseeable future. The competitive landscape is getting brighter with multiple streamers taking price increases. WBD is in the hands of a strong management team and board that are focused on creating long-term value for shareholders.”
2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 89
Based in Burbank, California, Walt Disney Company (NYSE:DIS) is a worldwide entertainment company. It operates multiple resort destinations; a cruise line; a beach resort; vacation ownership program; and guided tour adventure businesses. It is home to entertainment brands such as ESPN, Disney+, Hulu, Marvel Studios, and National Geographic, among others.
On February 7, The Walt Disney Company (NYSE:DIS) released its financial results for the quarter ended December 30, 2023. Its revenue remained nearly constant y-o-y at $23.5 billion while net income increased by 58% y-o-y to $2.2 billion.
Simultaneous to the earnings release, the Board of Directors of The Walt Disney Company (NYSE:DIS) approved a new share repurchase program targeting $3 billion in repurchases during the fiscal year. The Board also declared a cash dividend of $0.45 per share, representing an increase of 50% versus the last dividend.
1. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 89
Netflix, Inc. (NASDAQ: NFLX) is a leading provider of streaming entertainment services based in Los Gatos, California. It boasts more than 260 million paid memberships across more than 190 countries and offers a film and television series library through distribution deals as well as its own productions.
On January 23, Netflix, Inc. (NASDAQ:NFLX) released its financial results for Q4 2023. The company posted a revenue of $8.8 billion, which represents nearly 12% y-o-y growth, and a net income of $938 million. It also added 13.1 million new paid members to its platform during the quarter, which represents nearly 13% growth.
Netflix, Inc. (NASDAQ:NFLX) is also making efforts to return capital to its shareholders through share repurchases. During the quarter, it repurchased nearly $2.5 billion worth of its shares and had $8.4 billion remaining under its buyback authorization.
Polen Capital, an investment management company, made the following comments about Netflix, Inc. (NASDAQ:NFLX), in its “Polen Focus Growth Strategy” fourth quarter 2023 investor letter:
“Netflix has made meaningful progress on monetizing shared passwords and laying the foundation for consumer choice, although the ramp in advertising tier subscribers remains in the beginning stages. The low-hanging fruit may already have been picked on password sharing efforts, but our research shows there should be long tails of revenue and free cash flow growth. In our opinion, Netflix remains the most advantaged and profitable streaming service with opportunities to continue adding subscribers and raising prices as it demonstrates more value to consumers over time. Over the longer term, we also expect significant advertising revenue.”
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Disclosure: None. 12 Best Entertainment Stocks to Buy for 2024 is originally published on Insider Monkey.
