August sent investors into a tizzy, with massive volatility shaking up major indices. However, amidst the chaos, betting on the best entertainment stocks on the dip could prove wise.
In the backdrop of interest rate cuts, entertainment stocks offer a particularly attractive opportunity. Moreover, with corporate profits expected to rise, the sector stands to gain significantly from the resilience in discretionary spending.
This scenario is supported by JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon’s recent comments, which feel relatively confident about the economic outlook despite the current volatility. Moreover, he talked about how the unpredictable nature of market reactions serves as a reminder for investors to focus on long-term fundamentals.
That said, as we navigate through August’s turbulence, it’s important to avoid catching all falling knives and bet on the best bets in the entertainment space. These stocks have attractive long-term catalysts in play, offering a healthy upside ahead.
Entertainment Stocks To Buy: Take-Two Interactive Software (TTWO)
Take-Two Interactive Software (NASDAQ:TTWO) is the powerhouse behind some of the most iconic game franchises in Grand Theft Auto (GTA) and Red Dead Redemption.
Although recent sales and net bookings have dipped, the latest iteration in the Grand Theft Auto series in GTA6 could potentially shatter sales records once it hits the scene in the fall of 2025. Moreover, as per recent reports, the game will arrive as scheduled, dispelling concerns over a potential delay. Given the excitement surrounding the game’s launch, TTWO stock could blow past its all-time high price of $213.34.
Analysts expect GTA6 to drive a massive increase in the company’s sales, potentially leading to north of 50% growth over the next 16 months. Moreover, despite the headwinds, its outlook for fiscal 2026 remains robust, with projections pointing to an EPS boost exceeding 200%. Other catalysts such as mobile gaming and cost-cutting measures could set up the stock for monstrous gains ahead. The stock has been laggard of late, though, trading 14% behind its 52-week highs, which indicates an attractive buying opportunity.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) is perhaps the clear stand-out in the entertainment space, with its ubiquitous streaming platform serving over 278 million paying subscribers.
Despite its sheer size and a crowded streaming market, the firm’s subscriber base has grown at a healthy pace. In its most recent quarter, it added eight million new subscribers, underscoring its powerful positioning. Moreover, with the dust settling on its freeloader crackdown and the ad-based tier launch, NFLX stock is positioned for superb gains.
In its most recent quarterly showing, its sales surged 17% on a year-over-year (YOY) basis, driven by popular original content and an expanding ads business. Following these robust earnings, Netflix raised its sales growth forecast to 14% to 15% from the previous range of 13% to 15%. Additionally, as per Q2, it owns the largest market share in streaming, capturing 22% of the fast-evolving space.
As we look ahead, Netflix still has plenty left in the tank, backed by the introduction of live sports, video games, and a bold expansion into India as major long-term catalysts.
Disney (DIS)
Disney’s (NYSE:DIS) strategic pivot to streaming under CEO Bob Iger has proven a boon for its overall business. Its flagship, Disney+, burst onto the scene during the pandemic, amassing a stunning 100 million subscribers in just 16 months. The timely launch, layered with its strong content offerings, led Disney to the forefront of the streaming wars. Lately, despite the headwinds, Disney’s streaming segment continues to lead the way, backed by a killer combo of Disney+, Hulu, and ESPN+ turning a profit for the first time.
The powerful combo helped generate a superb operating income of $47 million in its most recent quarter. This financial upturn contrasts with the $512 million loss reported in the prior-year period. Moreover, Disney’s unique strategies, including pricing adjustments and rigorous cost control, led to a superb turnaround. Its streaming division alone reported a 15% hike in income, reaching $6.4 billion.
As we look ahead, Disney plans more price hikes to balance demand while maintaining margin growth. This approach, along with its commanding content slate across cinema, television, and sports broadcasting rights through ESPN+, positions it for long-term gains.
On the date of publication, Muslim Farooque did not have (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
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
