In line with my previous predictions, domestic U.S. leisure travel and the category’s growth have normalized to pre-pandemic levels. That means that, although leisure travel spending will remain elevated, it’s not going to explode higher as was the case in 2022 and the first eight months or so of 2023.
Consequently, I believe that Americans will have much more time and money to spend on live entertainment options close to home. As a result, I expect the growth of live entertainment companies to meaningfully accelerate in 2024. Here are three top-notch live entertainment stocks that investors can use to exploit the latter trend.
Live Nation Entertainment (LYV)
Live Nation (NYSE:LYV), which organizes concerts and other live entertainment events, was recently upgraded to “overweight” from “equal weight” at Morgan Stanley (NYSE:MS)
LYV has a “unique ability to capture the expanding global live music opportunity” and is benefiting from “Strong post-pandemic growth,” according to the bank. Morgan Stanley raised its price target on the shares to $110 from $100.
Last quarter, Live Nation’s operating income jumped 22% versus the same period a year earlier to $619 million, and it generated an impressive total of $762 million of operating cash flow in the first nine months of the year.
The stock’s enterprise value/EBITDA ratio of 13.85 is quite attractive.
Atlanta Braves Holdings (BATRA)
It feels strange to endorse Atlanta Braves Holdings (NASDAQ:BATRA) because I never liked the Atlanta Braves baseball team.
But in all seriousness, the stock’s valuation is attractive. As Boyar Intrinsic Value Research President Jonathan Boyar told Yahoo Finance recently, the shares are changing hands at a significantly lower price than the value of the Braves franchise, as estimated by Forbes. Indeed, Forbes estimates that the Braves are worth $2.6 billion, while the market capitalization of BATRA stock is $2.38 billion.
Also noteworthy is that the Braves were acquired for just $400 million in 2007, so history suggests that the value of the franchise will skyrocket over the long term.
Also noteworthy is that the Braves are a very successful team, while Boyar expects the franchise to be sold in the not-too-distant future. The latter event could result in a huge payday for the owners of BATRA stock.
Finally, I believe that Americans’ interest in Major League Baseball is increasing because the game has become faster thanks to the introduction of MLB’s “pitch clock.”
Given all of these points, I view BATRA as one of the best live entertainment stocks to own.
Dave & Busters (PLAY)
Dave & Busters (NASDAQ:PLAY) operates facilities that combine restaurants and arcades. Last quarter, its revenue fell 3% versus the same period a year earlier. However, its non-GAAP earnings per share beat expectations by $0.13.
In June 2022 the company acquired a smaller competitor and hired its CEO, Chris Morris, as the top executive of Dave & Busters.
PLAY’s new leaders have identified multiple ways to boost the company’s growth and profitability going forward. Among these methods are launching new marketing initiatives, including using major sporting events to boost traffic and raising prices to make PLAY’s fees more in line with those of its competitors.
The forward price/earnings ratio of PLAY stock is a very low 11.6
On the date of publication, Larry Ramer 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.
