With people forced to work at home, entertainment took a front seat in their lives, so here are 3 such stocks for long-term growth.
Feb. 27, 2021
These three companies have all crossed significant thresholds recently and are poised for more growth in the future. One continues to grow its subscriber base and expand its offerings of original content. Another gained 4 years’ worth of subscribers in under 15 months, and the last has been the gaming console sales leader for two years running.
Unlike the other two companies in this article, Disney (NYSE: DIS) did not see pandemic-fueled tailwinds; instead, it lost its biggest moneymaker when its theme parks were shuttered. Thankfully, the company launched its highly-successful streamer Disney+ in November 2019. Back then, Disney thought that it would reach 90 million subscribers by 2024 — it crossed that benchmark at the start of this year when it announced nearly 95 million members. Its new goal for 2024: between 230 and 260 million subscribers.
Its recent crowdpleaser, ‘WandaVision,’ is a Marvel product, one of many highly profitable franchises owned by Disney. Another is Lucasfilm, of which ‘The Mandalorian’ is a product. ‘The Falcon and the Winter Soldier’ and ‘Loki’ are two upcoming series that will no doubt be successful, and at this rate, the company won’t see a dearth in original programming. The recent surge in membership has driven Disney’s stock price to new highs but it still remains a valuable purchase.
Vaccine distribution is progressing at a reasonable pace and it’s only a matter of time until all of Disney’s theme parks reopen and their cruise ships set sail again. Additionally, film production will resume and the company can continue to churn out guaranteed blockbusters year after year. Disney+ will continue to grow as the de facto family brand to perhaps even exceed Netflix’s (NASDAQ: NFLX) numbers by 2026, according to an analyst at Digital TV Research.
First-to-market and market leader in the over-the-top (OTT) realm, Netflix crossed a big benchmark in Q4 as well by surpassing 200 million paid subscribers at the start of the year. The exact number is 203.7 million and the company got there by outspending all of its competitors on original content and international expansion. This year, Netflix will release a new film every week and will continue with hit new series’ like ‘Bridgerton’ and ‘The Witcher.’
Another important benchmark that the company is about to cross is to break even in terms of free cash flow (FCF) this year and begin generating positive flow next year — as well as the potential of stock buybacks once it accumulates enough cash to reward its stockholders. The company raised subscription prices by $2 recently for which it is expected to see an additional $2.34 billion in revenue in 2021.
Netflix has raised prices five times now and proven that it can because subscribers aren’t going anywhere. Studies have revealed that people add additional subscriptions but always keep Netflix as well (it’s still cheaper than cable). Additionally, it is the most-watched of all services, averaging 9.5 hours a week per household compared to 5.8 hours for Amazon Prime and 5 for Disney+. The company still has room to grow as most of its new subscribers come from outside the United States and Canada and as the OTT landscape develops further in these regions, Netflix is sure to reap the rewards
Nintendo’s (OTC: NTDOY) stock price has gone up nearly 60% in 2020 and its revenue is up over 185% in the last 5 years. Recent gains were made by sales of the Nintendo Switch, which led to sales of all consoles in the last two years with 71 million units sold so far. Not being a gamer myself I had to rely on the expertise of a professional, my nephew, Braiden. Did he own one? Of course he did. Is it cool? Is it ever! It’s portable and can be hooked up to your tv and has online capabilities as well as multiplayer functionality with other Switch owners. Most importantly, however, he told me that Nintendo games are just fun and the Switch has them in spades, exclusively.
Sales recently were further boosted by the pandemic and popular games like ‘Animal Crossing: New Horizon.’ The Switch even outsold the Sony PlayStation 5 and Microsoft XBOX Series X consoles during the holidays. Sales were so good that the company met its annual revenue projection in three quarters, forcing Nintendo to raise its estimate to $15.3 billion for the year. The company plans to release the ‘Switch Pro’ later this year so expect further gains.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.