Canadians: 2 Ways to Invest in Streaming on the TSX

Corus Entertainment Inc. (TSX:CJR.B) and WildBrain Ltd. (TSX:WILD) have pivoted to digital content, but success in this competitive environment is far from certain.

| More on:
Lady holding remote control pointed towards a TV

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The media landscape underwent some significant changes over the course of the 2010s. Investors who scooped up Netflix at the beginning of the decade have a lot to smile about. The rise of streaming has also put the traditional cinema business in a bind. Cineplex stock was hit with major volatility in the back half of the decade. Its shareholders received a bump after Cineplex signed a definitive agreement to be acquired by the United Kingdom-based Cineworld Group.

That leaves a handful of media companies listed on the TSX for Canadians to choose from. The streaming wars will pit tech giants like Netflix, Amazon, Apple, and Facebook against one another. This competition, which will inevitably lead to price wars, may swing the door open for smaller providers.

Today, I want to look at two Canadian stocks that will have to play their cards smart to make this happen in the 2020s.

Corus Entertainment

Legacy media providers who are in the middle tier have often taken the worst hits in this evolving environment. Corus Entertainment (TSX:CJR.B) is a Toronto-based mass media and broadcasting company. It owns brands like the Global Television Network and is particularly influential in the children’s television space, owning YTV, Teletoon, Treehouse TV, and others.

In 2019, Corus announced a move into the digital streaming market, as Corus Global TV would not be available on all Roku devices across Canada.

Shares of Corus have dropped 2.6% year over year as of close on January 23. The sting has been lessened somewhat, as Corus offers a quarterly dividend of $0.06 per share, representing a 4.4% yield. Corus released its first-quarter fiscal 2020 results on January 10.

Consolidated revenues rose marginally from the prior year, but segment profit fell to $184 million compared to $191 million in Q1 FY 2019. Free cash flow increased to $53 million over $42 million, and adjusted earnings per share climbed to $0.38 compared to $0.33 in the prior year. Corus is facing challenges in its sector, and it has been degraded as a dividend payer, but it boasts nice value right now with a low price-to-earnings ratio of 6.5 and a price-to-book value of 0.6.

WildBrain

WildBrain (TSX:WILD), which was formerly known as DHX Media, is a Halifax-based media production, distribution, and broadcasting company. It owns globally recognized brands like Caillou, Peanuts, Inspector Gadget, and others. The company’s name change was appropriate as it has pivoted to a focus on cultivating its WildBrain streaming service.

In 2016, then-DHX Media announced the formation of a multi-channel network under the WildBrain name. Later in 2018, the company announced that it would prioritize investments into digital content and elected to forgo a sale. The WildBrain Spark network is oriented towards digital children’s content on services like YouTube.

Investors can expect to see its second-quarter fiscal 2020 results in early February. In Q1 FY 2020, it reported revenue growth of 8%, and adjusted EBITDA rose to $19.6 million over $17.3 million in the prior year. WildBrain Spark views increased 66% year over year to over 12 billion in the quarter. Revenue at WildBrain Spark surged 37% to $22.1 million.

WildBrain is an expensive bet right now, with its namesake still only making up a fraction of its total revenue. Of the two stocks I’ve covered today, Corus is my favoured pick right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Amazon, Apple, Facebook, and Netflix. Tom Gardner owns shares of Facebook and Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, and Netflix.

More on Investing

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Top Dividend Stocks to Buy Under $20

Given their stable cash flows and high dividend yields, these three under-$20 stocks could boost your passive income.

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Dividend Stocks to Buy During Recession to Lock In a 6% Yield

Make the most of the recession with dividend investing. You can buy stocks for a discount and lock in higher…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Canadian Bank Stocks Near 52-Week Lows: Buy Them All With This ETF

Here's an easier way to buy the dip.

Read more »

Choice of fashion clothes of different colors on wooden hangers
Stocks for Beginners

Is Aritzia (TSX:ATZ) the Best TSX Stock to Buy in July 2022?

Aritzia’s international market expansion and improving profitability could help its stock recover fast.

Read more »

exchange traded funds
Investing

2 Cheap Vanguard and BlackRock ETFs to Buy and Hold Forever

These two funds are great ways to invest in the U.S. and Canadian stock markets.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Put TFSA Cash to Work: Earn a Tax-Free Yield of at Least 5%

By investing your TFSA cash in these stocks, you can earn a reliable and high yield of more than 5%.

Read more »

clock time
Investing

New TFSA Investors: Time to Buy Stocks Amid the Market Correction?

TD Bank (TSX:TD)(NYSE:TD) stock seems like a great long-term buy for beginner investors willing to put up with the short-term…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Tech Stocks

3 Growth Stocks Trading at a Massive Discount Right Now

Canadian growth stocks such as Shopify have the potential to deliver market-beating gains to investors in the next year.

Read more »