Several industries and markets are changing quite rapidly nowadays, and the entertainment industry is one of them.
Streaming services have already slashed the cinema business to a smaller size, and newer content creation formats may make the old ones obsolete, weakening the revenue stream of the businesses that rely upon them. But that doesn’t mean there are no viable investment options in the entertainment sector.
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A cinema company
Cineplex (TSX: CGX) was already reeling from the negative impact of the coronavirus and the lockdowns that followed when the company got another blow — the merger deal with the British cinema giant falling through. It brutalized the stock, and it lost about 86% of its market value from the propped-up price that the initial merger news facilitated.
The current year has been slightly better than the last one, which mostly saw the stock’s decline, and it has gone up by about 11% so far. The good news is that its revenues, thanks to the audience numbers, are going up, and if they keep on climbing, the financial recovery may trigger faster stock appreciation.
It’s currently facing some regulatory challenges, and getting to the other side of those challenges may also be rewarding for the stock.
A children’s content company
Halifax-based WildBrain (TSX: WILD) predominantly creates content for children and owns the rights to many beloved and world-renowned franchises like Teletubbies and Peanuts, in which it has a 41% stake. Ownership of such intellectual property, an extensive content library, and high-end animation facilities are some of the most prominent assets of the company.
The market value of this stock is currently hovering near the lower end of small-cap stocks, and it’s a fraction of what it was in its golden days. The best growth period for the stock was between 2012 and 2015, when the stock rose by at least 1,300%.
The stock has gone through multiple short-term growth phases in the last five years, and buying it now, when it’s heavily discounted, might allow you to leverage the next bullish phase.
A diverse media company
Corus Entertainment (TSX: CJR.B) has a presence in multiple facets of the entertainment industry. It owns about 39 radio stations and provides services to about 48 TV channels, including both general and specialty channels. The company also has a content creation arm that has produced content for media outlets around the globe.
The company has lost over 94% of its value from its peak position in 2014, and its price is a fraction of what it was in the good, old days. But a benefit of becoming a lightweight small-cap stock is that even moderately powerful bullish phases may double the capital for the company’s investors. In the last five years, the stock has risen over 100% twice. The stock is also currently offering a mouthwatering 9% yield.
Foolish takeaway
The entertainment industry stocks can help you generate decent returns if you buy them at discounted and hold them long enough for the next bull market phase to arrive. If the phase is strong and relatively long term, you may generate decent returns in a matter of months.
