3 Entertainment Stocks That More Than Doubled in 2021
Despite uncertainties stemming from the COVID-19 pandemic, Entravision (EVC), Salem Media (SALM) and WideOpenWest (WOW) maintained a solid growth momentum in 2021.
Various industry verticals — ranging from telecommunications to hospitality — across the globe have been severely hit by the coronavirus outbreak. This has led to global macroeconomic uncertainty and intense volatility in equity markets.
Although the situation has improved in 2021 with accelerated vaccination drives, uncertainties persist owing to the risks related to the resurgent waves of infection from new coronavirus variants. Despite all the chaos, the global media and entertainment industry stands rock solid and continues to gain from this disruptive event.
The media and entertainment industry is currently witnessing a massive spike in demand for live content on the back of robust streaming platforms. Innovative business models across the entertainment value chain are a bonus. Lockdowns have boosted many trends like increased streaming on over-the-top (OTT) platforms.
As consumption of streaming OTT content rose, entertainment companies witnessed considerable demand for subscription services and growth in the number of ad-supported videos, specifically designed for cost-conscious consumers. With customers experimenting more with various entertainment options, service providers have adopted innovative strategies for aggregation, content development and delivery.
These factors have propelled media companies to develop a more nuanced approach to understanding the dynamic behavior patterns of today’s consumers. Binging exclusive content from streaming companies and advancements in wireless technologies with growing Internet penetration have made viewers stick to small screens.
Thanks to avant-garde digital capabilities, production houses are getting access to consumers’ data easily, thereby enabling them to create content that strikes the right chord with customers. User-generated content platforms like Instagram have increased collaborations with the top influencers. These influencers produce content-driven videos from the comfort of their homes, adding a different dimension to the digital entertainment experience.
The video game industry, an integral component of the entertainment industry, has emerged as a thriving sector in 2021. The year witnessed steady growth of interactive gaming, app-based games and esports. Per a report from Research and Markets, it is estimated that the global gaming market will reach $287.1 billion by 2026, at a CAGR of 9.24%. With accretive releases of gaming titles and consoles, the industry is on a joyride, with sales rising every month. Hence, the videogame market holds immense growth potential in 2022 and beyond.
3 Key Picks
Riding on such positive trends, we have selected three major entertainment stocks that more than doubled in 2021. The selection has been made with the help of the Zacks Stock Screener, wherein these stocks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) with a year-to-date price change of more than 100%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Entravision Communications Corporation EVC: Headquartered in Santa Monica, CA, Entravision is a diversified global media, marketing and technology company that caters to clients in more than 30 countries across Asia, Europe and Latin America. Its portfolio comprises advertising technology platforms and digital media properties that offer performance-based solutions and data insights.
The company boasts 55 television stations and 49 radio stations. It is also involved in selling advertisements and syndicate radio programming to more than 100 markets across the United States. EVC operates under three segments based upon the type of advertising medium — television, radio and digital. Entravision generates a majority of its revenues through sales of national and local advertising time on television stations, retransmission consent agreements. Digital media platforms also are a prime revenue generator.
One of its primary business strategies is to cater to Hispanic customers, mainly based in the United States, Mexico and other markets in Latin America. Entravision intends to continue evaluating opportunities to tap lucrative acquisitions in the future, domestically and internationally. The buyouts will include digital companies and spectrum assets with high potential for future monetization.
Entravision carries a Zacks Rank #2. EVC delivered a trailing four-quarter earnings surprise of 29%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 14.6% upward in the past 60 days. In 2021 (as of Dec 29, 2021), the stock has surged 145.4% compared with a 7.4% rise of the industry.
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Salem Media Group, Inc. SALM: Based in Camarillo, CA, Salem Media Group is one of America’s leading Internet content providers, radio broadcasters and magazine publishers. The company is fundamentally committed to programming and content highlighting conservative family themes and news. Its integrated multimedia platform encompasses traditional media, podcasts, mobile applications and websites.
The company has three operating segments — Broadcast, Digital Media and Publishing. It boasts a focused, sales-oriented culture that rewards selling efforts through a commission and bonus compensation structure. Salem owns and operates 99 radio stations, with 56 in the United States’ top 25 top markets. It owns Salem Radio Network, which is responsible for promoting talk shows and music programming to 3000 affiliates.
Amid a dynamic marketplace, Salem is committed to augmenting its media platform while aggressively managing operating costs and cash flows. Its expansion opportunities involve providing state-of-the-art broadcast and digital marketing services, increasing the distribution and page views for print and digital content and boosting the strength and reach of its broadcast signals.
Salem Media has a Zacks Rank #3. SALM delivered a trailing four-quarter earnings surprise of 323.9%, on average. With a VGM Score of A, the Zacks Consensus Estimate for its current-year earnings has been revised a whopping 115.9% upward in the past 60 days. In 2021 (as of Dec 29, 2021), the stock has gained 186.5% compared with a 7.4% increase of the industry.
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WideOpenWest, Inc. WOW: Headquartered in Englewood, CO, WideOpenWest is a leading broadband provider that caters to residential, business and wholesale consumers with an efficient, high-performing network. Its services are delivered across 19 markets, primarily in the Midwest and Southeast regions of the United States, through an advanced hybrid fiber-coax network. As of Dec 31, 2020, the company served 850,600 customers, reflecting a total customer penetration rate of nearly 27%.
WOW offers its Midwestern broadband networks in Detroit and Lansing, MI; Cleveland and Columbus, OH; Evansville, Indiana and Baltimore, MD and Chicago, IL. Some Southeastern systems are located in Charleston, SC; Panama City and Pinellas County, FL and Augusta, Columbus, Newnan and West Point, GA. In early 2020, the company shifted toward IP-driven services in certain markets through OTT trials, in which it offered high-speed data (HSD) only service with an alternative video streaming option.
WideOpenWest’s initiatives are perfectly aligned with the accelerated shift in the industry toward increasing consumption of content over the Internet and higher dependence on fast HSD service to work remotely effectively. The company has also inked agreements with third-party streaming providers such as Fubo, YouTube TV and Sling TV. The company is committed to addressing customers' requirements with focus on the management of network bandwidth needs and the development of self-service options.
WideOpenWest also has a Zacks Rank #3. The Zacks Consensus Estimate for WOW’s next-year earnings has been revised 70.5% upward in the past 60 days. In 2021 (as of Dec 29, 2021), the stock has soared 101.3% against the industry’s fall of 1.4%.
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Entravision Communications Corporation (EVC): Free Stock Analysis Report
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