Media stocks are in the hot seat, as Hollywood writer and actor strikes hit the four-month mark. Already, there’s been a bloodbath in the entertainment industry as media stocks like Warner Bros Discovery (NASDAQ:WBD) and Paramount (NASDAQ:PARA) fall rapidly.
Still, overlooked sectors of the media industry represent hidden potential. Looking beyond movie and television entertainment, diverse media stocks representing music and video gaming are poised to break out. Broader markets overlook these three media stocks. Still, they all enjoy recent good news that could boost share pricing. At the same time, they have the long-term potential to break free from the broader media slump.
So here are the best media stocks to buy.
Nintendo (NTDOF)
Nintendo (OTCMKTS:NTDOF, OTCMKTS:NTDOY) is a long-time gamer favorite, but its lackluster performance hides long-term potential. In a recent podcast, Digg founder and investor Kevin Rose affirmed the stock’s potential based on a robust intellectual property portfolio. He pointed to the Super Mario Bros. movie hitting $1.4 billion in global box office sales. That’s a hefty figure, but the movie’s performance was overshadowed by Mattel’s (NASDAQ:MAT) Barbie movie, released around the same time.
But Nintendo is more than Mario, and the company has a suite of franchises ripe for moviemaking, including Zelda, Pokemon, and Kirby. As moviemakers increasingly lean on existing properties rather than create new concepts, Nintendo’s vast portfolio represents untapped potential.
But the biggest Nintendo news is the unconfirmed leak that the company is teaming up with Google (NASDAQ:GOOG, NASDAQ:GOOGL) to create a next-generation virtual reality gaming headset. The news is huge if true, as analysts expect the virtual reality gaming market to grow 27% annually through 2030.
Ultimately, Nintendo is an overlooked media stock on its franchise strength alone. But a Google/Nintendo matchup could mean big things for this media stock. If you are interested in a Nintendo investment, you likely noticed that there are two tickers available. The differences between NTDOY and NTDOF are subtle but important. Before deploying capital into either, research both to best invest according to your unique needs.
Allied Gaming & Entertainment (AGAE)
Allied Gaming & Entertainment (NASDAQ:AGAE) is a risky play as it is firmly within penny stock territory, but its potential as an eSport giant makes the risk worth taking. The company is nearly debt-free, notable for a small startup, and trades below market value at a 0.38 price-to-book ratio. But AGAE’s long-term potential makes it a media stock worth considering.
The company’s revenue climbed 182% in the most recent quarterly filing compared to last year’s period. Likewise, costs and expenses dropped 2.5%, meaning AGAE is adept at trimming the fat in a tight economy. Yingua Chen, the company CEO, affirmed AGAE’s long-term potential based on its subsidiary strength post-restructuring. In the same filing, the CEO reported that “AGAE now consists of three fully owned subsidiaries: Allied Esports International, Allied Experiential Entertainment, and Allied Mobile Entertainment. This restructuring aims to optimize our resources and provide investors with greater clarity on our business outlook and direction.”
Intelligent restructuring and sound financial management make AGAE a compelling media stock. Likewise, its bottom-barrel pricing makes it worth a gamble on this eSport stock’s future.
Anghami (ANGH)
Anghami (NASDAQ:ANGH) is another risky penny stock play, but recent expansion could mean big things for the music streaming service. The Middle Eastern streaming service recently announced a hefty investment totaling $5 million from a Saudi investment firm. Investment firms like the Saudi Research and Media Group are well known for prudent cash deployment. Their investment in Anghami should make investors take note of this media stock.
The deal valued Anghami shares at around $2.50 each, more than 180% above current pricing. If the investment firm thinks Anghami is worth more than double its current value, they’re confident in its long-term prospects in the otherwise untapped regional market. The investment will also help Anghami expand its services and reach, which is critical for a fledgling firm of its size.
The company’s current price-to-sales ratio also makes it an attractive media stock to bet on, as it’s consistently below 0.50. While the firm remains unprofitable, consistent revenue increases and institutional attention could mean a breakout for this media stock.
On the date of publication, Jeremy Flint held a long position in NTDOY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
