7 Best Streaming Video Stocks to Bet on Heading Into Q4
Streaming video stocks and their businesses have seen significant gains recently. The increased adoption of cloud-based streaming solutions, improvement of video quality in streaming and the Covid-19 lockdowns have all served as catalysts.
As a result, investors have seen massive growth in media services like Disney+, Netflix, Roku and Amazon’s (NASDAQ:AMZN) two services, Prime Video and Twitch. In fact, investors have seen prices reach all-time highs. For instance, for the past 12 months, the Invesco Dynamic Media ETF (NYSEARCA:PBS) and the iShares Evolved U.S. Media and Entertainment ETF ((BA)TS:IEME) are up about 49% and 32%, respectively.
Both of these funds hit record highs in mid-March. But since then, many video streaming stocks have come under pressure and these exchange-traded funds (ETFs) have lost well over 10%. Still, that only provides a better entry point for interested investors. Grand View Research recently highlighted the following:
“The global video streaming market size was valued at USD 50.11 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 21.0% from 2021 to 2028.”
Moving forward, the convenience of watching content at will, the wider use of smartphones and other various technological developments (such as 5G) will only offer this industry more tailwinds. So, with that information, here are seven streaming video stocks to consider adding to your long-term portfolio:
- Comcast (NASDAQ:CMCSA)
- FuboTV (NYSE:FUBO)
- Netflix (NASDAQ:NFLX)
- Roku (NASDAQ:ROKU)
- Spotify (NYSE:SPOT)
- ViacomCBS (NASDAQ:VIAC)
- Disney (NYSE:DIS)
Streaming Video Stocks to Buy: Comcast (CMCSA)
52-week range: $40.97 – $61.80
First up on this list of streaming video stocks is Comcast. This company is comprised of three primary businesses: Comcast Cable, NBCUniversal and Sky. In particular, its core cable business owns networks that provide television, Internet access and phone services to some 60 million U.S. businesses and homes.
Comcast released second-quarter results back in late July. Revenue surged about 20% year-over-year (YOY) to $28.5 billion. Net income also increased 25% to $3.7 billion, or 80 cents per diluted share. Likewise, adjusted earnings per share (EPS) soared 22% to 84 cents. Finally, Comcast generated free cash flow of $4.8 billion. Cash and equivalents ended the period at $12.4 billion. On the results, CEO Brian Roberts said the following:
“At Cable, our performance was exceptional, highlighted by 11% revenue and 15% Adjusted EBITDA growth, the best broadband and total customer relationship net additions on record for a second-quarter […]”
Right now, Comcast is also focused its over-the-top (OTT) subscription-based streaming service for film and TV, Peacock. This service is helping it stay competitive with other streaming plays. All told, this is an attractive stock for long-term investors. CMCSA stock has a reasonable price and a high dividend yield of 1.75%.
Shares have come under pressure in September. Now, the stock trades around $57 mark. It’s up 8% year-to-date (YTD). What’s more, the forward price-to-earnings (P/E) and price-to-sales (P/S) ratios stand at 18.38 and 2.28, respectively. Interested readers could consider buying around these levels.
52-week range:Apple-converted-space”> $8.26 – $62.29
FuboTV is a live-TV streaming company that gives subscribers access to live sporting events, news and various entertainment content. True, it is a relative newcomer to the media streaming industry. However, this company’s “sports first” positioning has made FuboTV one of the fastest-growing players in the space.
Ever since it went public in the fall of 2020, revenue has been acceleraing. Most recently, FuboTV released Q2 results in mid-August. For the quarter, revenue almost tripled to $131 million. What’s more, while adjusted net loss stood at $51.3 million (about the same level that it stood at in the prior-year quarter), adjusted loss per share declined to 38 cents. That is a significant improvement from the $1.46 it lost in the prior-year quarter.
Back in December 2020, FuboTV acquired Balto Sports. It also acquired sportsbook platform Vigtory in March 2021, boosting its entry into the sports betting industry. By the end of 2021, the company plans to launch Fubo Sportsbook, a gambling app designed to work with its streaming service to modify betting options based on what a subscriber is watching.
All in all, this pick of the streaming video stocks is well-positioned to become a magnet for sports viewing and betting. FuboTV’s customer base of sports fans has attracted many marketers. Ad revenue per user came in at $8.70 per month in Q2 (Page 4).
Right now, FUBO stock hovers around the $27 mark. It’s down over 4% YTD, offering a buying opportunity for buy-and-hold investors. Shares trade at 6.32 times trailing 12-month (TTM) sales.
52-week range: $463.41 – $615.60
Next up on this list of streaming video stocks, Netflix is a leading provider of subscription-based streaming entertainment services. The company has more than 200 million paid subscribers in some 190 countries who watch various TV series, documentaries and feature films across multiple languages and genres.
Like others on this list, NFLX released its Q2 financials in mid-July. Revenue of $7.3 billion increased 19% YOY. What’s more, net income of $1.35 billion, or $2.97 per diluted share, was up from $720 million in the prior-year period. Lastly, cash and equivalents ended the quarter at $7.8 billion.
All told, this name remains the largest streaming pure play on our list. True, net new U.S. subscribers in the U.S. have declined; the company lost 430,000 customers in the North American market in Q2, an expected outcome after the end of stay-at-home period. Plus, Netflix is coping with a shortage of new shows as the pandemic continues to delay new productions.
However, management is currently focused on the international markets. Future expansion is primarily expected in Asian countries other than China. Developing content tailor-made for specific geographies remains critical for the company’s continued growth worldwide. Of course, producing that original content does require significant investments. Regardless, Netflix still seems on track to generate positive free cash flow in 2022.
Currently, NFLX stock trades around the $580 mark. Shares are up over 7% YTD. What’s more, the forward P/E and current P/S ratios stand at 55.77 and 9.45, respectively. A potential decline toward $575 or below would improve the margin of safety for prospective investors.
52-week range: $163.54 – $490.76
Roku has quickly become one of the leading TV platforms in the United States, distributing content via its Roku Channel and acting as an option for customers to manage all of their streaming subscriptions at once. The group generates revenue from advertising, hardware sales, distribution fees, OS licensing and subscription sales.
Management issued Q2 results back in early August. For the quarter, revenue surged 81% YOY to $645 million. Moreover, growth in average revenue per user (ARPU) accelerated 46%. Net income came in at $73.4 million, or 52 cents per diluted share. That’s compared to a net loss of $43 million in the prior-year quarter. Finally, cash and equivalents ended the period at $2.1 billion. After the release of the results, CEO Anthony Wood noted:
“Roku remains very well positioned to benefit from the long-term secular trend of audiences, content, and advertisers shifting to TV streaming around the globe.”
Overall, this pick of the streaming video stocks is poised to benefit from an influx of consumers, content providers and advertisers that are continuing to shift towards streaming. The company distributes its smart TV software and devices at minimum cost, making money instead from ads and subscription management. Its platform brings viewers, content companies and advertisers to a single platform. This also represents significant value for businesses that want to reach a wider audience.
ROKU stock has seen significant volatility throughout the year. Right now, shares are at the $315 level, down 5% YTD. Despite the recent pullback, though, ROKU still trades at a high valuation; its TTM P/S ratio of 18 times is overstretched. As such, investors would find better value around $310 or so.
Streaming Video Stocks to Buy: Spotify (SPOT)
52-week range: $201.68 – $387.44
Based in Sweden, Spotify is not quite one of the streaming video stocks. Rather, it’s one of the largest music streaming service providers in the world, with over 150 million listeners. SPOT monetizes these users through a paid subscription model — “Spotify Premium”– and an ad-based model referred to as its “ad-supported” service.
Spotify released Q2 results back in late July. For the quarter, revenue grew 23% YOY to 2.33 billion euros ($2.73 billion). Additionally, total monthly active users (MAUs) grew 22% YOY to 365 million. Its net loss also came in at 20 million ($23.4 million), or 19 euro cents per diluted share. That’s compared to a net loss of 356 million euros ($417.6 million) in the prior-year quarter. Lastly, this company generated free cash flow of 34 million euros ($39.8 million) while cash and equivalents ended the period at 2.44 billion euros ($2.86 billion).
Spotify’s paid subscriber base has grown significantly over the last few years. Now, it competes with Apple’s (NASDAQ:AAPL) Apple Music in the United States. Globally, Spotify is also using its dominant market share to create a broader ecosystem in music streaming. The company is currently focused on podcasts, as they reduce its reliance on major record labels. All U.S.-based podcasters can also now use Anchor, the company’s podcast creation and distribution platform.
Management recently approved a $1 billion stock repurchase program, which usually implies a company believes its stock is currently undervalued. Right now, SPOT stock hovers between $235 and $240. Shares are down nearly 25% YTD and trade at 4.61 times current sales. All told, the recent selloff may allow long-term investors to grab this one at a discount.
52-week range: $26.99 – $101.97
Next up on this list of streaming video stocks is ViacomCBS, the large media conglomerate that resulted from the merger of CBS and Viacom back in late 2019. The combined assets of this name include the CBS television network, numerous local TV stations, Showtime, Nickelodeon, MTV, Comedy Central, Paramount and much more.
ViacomCBS released Q2 results in early August. For the quarter, revenue surged 8% YOY to $6.56 billion. Additionally, net earnings came in at $995 million, or $1.50 per diluted share. That is up from $453 million a year ago, or 73 cents per diluted share. Finally, cash and equivalents ended the quarter at $5.38 billion.
This name has become a potential power player in the streaming space. For example, the company recently launched Paramount+, a new version of its previous CBS All Access service that offers an extensive film and TV content library. On the Q2 results, CEO Bob Bakish remarked the following:
“Looking ahead, we’re excited about our opportunity to build on this momentum, as we scale Paramount Plus’ content offerings across genres and expand our reach with global audiences.”
VIAC stock currently trades in the high $30s to $40 territory, some 60% lower than its March high. Shares are up just 4% YTD. However, the selloff means long-term investors can easily start a position as the company transforms into a leader in the streaming space. VIAC stock also offers a solid dividend yield of 2.4%. Forward P/E and current P/S ratios stand at around 10.04 and 0.94, respectively.
52-week range: $117.23 – $203.02
Last up on this list of streaming video stocks to buy is a media and entertainment giant that needs little introduction: Disney. In addition to operating theme parks and making both live-action and animated films under studios like Pixar, Marvel and Lucasfilm, Disney also operates media networks and several TV production studios.
This company launched its streaming service called Disney+ back in late 2019. The pandemic allowed the new platform to gain millions of subscribers worldwide in its first year, quickly becoming one of the largest subscription streaming services after Netflix. Disney also owns Hulu and ESPN+.
Disney released its fiscal Q3 2021 results in mid-August. For the period, revenue surged 45% YOY to $17 billion. Net income from continuing operations also came in at $923 million, or 50 cents per diluted share. That is compared to a loss of $4.71 billion in the prior year. Finally, cash and equivalents ended the quarter at over $16 billion. On the results, CEO Bob Chapek noted the following:
“[O]ur direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney+, ESPN+ and Hulu at the end of the quarter, and a host of new content coming to the platforms.”
While the pandemic continues to delay new productions, leading to a shortage of new shows, Disney isn’t feeling the same impact as other companies thanks to its extensive catalog of popular legacy shows and films. Plus, its diverse lines of business offer robust cash flows to protect it from a bitter pricing war in the streaming space.
Currently, DIS stock hovers at around $178. It is up just over 1% YTD and 38% for the past one year. Shares trade at 74.18 times forward earnings and 5.24 times current sales.
On the date of publication, Tezcan Gecgil did not have (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.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and UK. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.