As this month’s Roaring Kitty meme wave has now come and gone, it’s time to skip on names like AMC Entertainment (NYSE:AMC), and look at far better entertainment stocks to buy for growth and value.
Even as AMC stock has coughed back most of its gains from this short-lived meme rallies, shares in the movie theater chain remain at risk of experiencing additional sharp price declines. Mostly, because of the company’s continued aggressive use of dilutive financing methods, such as debt-for-equity swaps, as well as the sale of newly issued shares.
However, if you are looking for entertainment stocks to buy , there are a multitude of much stronger opportunities out there, one of which is a direct AMC competitor. Whereas AMC is overvalued and overhyped, many of these alternative choices are undervalued, and could prove their skeptics wrong in a big way.
With this in mind, let’s dive in and take a look at seven entertainment stocks to buy instead of AMC.
AMC Networks (AMCX)
AMC Networks (NYSE:AMCX) may have a similar-sounding name as AMC Entertainment, but the two companies are not related. Shares in this operator of cable television and streaming networks also differ from AMC in other ways.
While AMC stock is overvalued and overhyped, AMCX stock is undervalued and underestimated. Short-sellers have aggressively bet against AMC, on the view that cord-cutting and the pivot to streaming will be detrimental to its business. Still, much like I argued late last year, these negatives are more-than baked into its valuation.
Shares today trade for only 3.1 times forward earnings. Although AMCX’s latest results suggest more disappointment ahead, with so much uncertainty baked into its valuation, it may take just a modicum of positive news to send this stock significantly higher. This alone makes AMCX a much better buy than AMC.
Cinemark Holdings (CNK)
You may justify holding AMC, on the view that the company will benefit from a further post-COVID rebound in movie theater attendance.
However, if you’re looking to make such a wager, Cinemark Holdings (NYSE:CNK) is one of the better entertainment stocks to buy.
The reasons for this go beyond just the fact that CNK stock, at 15 times forward earnings, is far more attractive than AMC in terms of valuation. As Benchmark analyst Mike Hickey argued last month, Cinemark stands to benefit from having a stronger balance sheet than its peers, as well from a further contraction in total movie screens nationwide.
Hickey also expects a significant increase in box office receipts starting next year. The analyst is not alone in this assessment, based on 2025 forecasts. Consensus calls for revenue to rise 13.1% in 2025, with earnings soaring 47%, from $1.19 to $1.75 per share.
Fox (FOX)
Fox (NYSE:FOX) continues to be somewhat of a value trap among entertainment stocks. FOX is seen as a declining “old media” play, which benefits you if you haven’t invested yet.
The Fox News Channel and Fox Sports parent continues to increase its streaming exposure, such as through the further expansion of its Tubi advertising-supported streaming platform.
That’s not all. Alongside the Tubi catalyst, BofA’s Jessica Reif Ehrlich noted other potential catalysts, in her recent upgrade of FOX stock.
Ehrlich noted that Fox’s linear media assets could be more resilient, due to their greater amount of live content like sports or news. She also mentioned the potential with Fox’s “hidden asset”: its option to buy a stake in online sportsbook FanDuel, as well as its stake in FanDuel’s parent, Flutter Entertainment (NYSE:FLUT).
Lions Gate Entertainment (LGF.A,LGF.B)
Lions Gate Entertainment (NYSE:LGF-A,NYSE:LGF-B) is a media holding company that owns premium cable and streaming company Starz, as well as an 87.3% stake in Lionsgate Studios (NASDAQ:LION).
LGF used to own both outright, but this year it split off its eponymous film studio assets, through a special purpose acquisition company merger.
In time, this split off could help realize significant value for LGF-A stock investors. With a market cap of $2.06 billion, LGF-A trades at a discount to the value of its LION stake, which means you get the Starz media assets for free.
Also, as noted in an investor presentation, content-rich media companies have been sold in recent years at very higher valuations.
Hence, Lionsgate Studios could be worth far more to a strategic buyer. Chock full of deep value, consider Lions Gate Entertainment one of the entertainment stocks to buy instead of AMC.
Paramount Global (PARA)
Like I have discussed previously, Paramount Global (NASDAQ:PARA) is “in play,” with several strategic and financial acquirers reportedly interested in taking buying all or some parts of the media conglomerate.
Sony (NYSE:SONY) and Apollo Global Management (NYSE:APO) have been the latest bidders for the company. Although there have been concerns they were about to back out of making a bid, recent developments suggest it is still possible.
But while a possible takeover is currently the strongest catalyst for PARA stock, it’s not as if it’s the only catalyst at hand.
As Seeking Alpha commentator Max Greve recently argued, sentiment for PARA has been clouded by last year’s reporting of one-time losses. Also, he argued that as Paramount is moving away from overspending on streaming content, its operating performance could improve dramatically. Improved results could, in turn, spark an additional rally.
Sinclair (SBGI)
If you’re looking for deep value, Sinclair (NASDAQ:SBGI) is one of the best entertainment stocks to buy. Sure, there is a very good reason why shares in this broadcast television station operator trade at rock-bottom prices.
SBGI trades for only 4.1 times forward earnings, and has a 8.12% forward dividend yield.
Sinclair is highly exposed to the decline of linear media. It also has a heavily-leveraged balance sheet to boot. Yet while SBGI stock is hardly a problem-free situation, there is the potential for big rewards, if you choose to go contrarian, and buy this stock.
Why? For one, further news regarding a possible sale of nearly a third of Sinclair’s stations is something that may drive another outsized move for the stock. Also, as InvestorPlace Earnings reported earlier this month, EPS came in better-than-feared last quarter. Similar positive surprises may lie ahead.
Warner Bros Discovery (WBD)
Yes, Warner Bros Discovery (NASDAQ:WBD) has been a value trap since the Reverse Morris Trust transaction that created it closed in 2022. At that time WBD stock traded for around $25 per share.
Today, shares change hands at around $7.75 per share. Still, it’s possible shares have finally hit a bottom. At least, based on the bull case laid out by one analyst team. Earlier this month, analysts at KeyBanc who upgraded WBD to “overweight,” with an $11 per share price target.
In its upgrade, KeyBanc cited several catalysts, including the prospect of WBD’s streaming segment to become profitable next year.
Given some of the more negative takeaways from the company’s latest earnings release, this may not be the best opportunity out there among entertainment stocks. However, WBD is definitely a much more compelling buy than AMC.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
