Should Investors Buy These Top Entertainment Stocks?

March 18, 2021 9:15 AM EDT

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Do You Have These Top Entertainment Stocks On Your Watchlist?

You can't deny that it has been a tough year for all of us, to a certain extent. With the world still caught amid a pandemic, most would want to escape reality through entertainment. This could explain why investors continue to flock towards entertainment stocks of all kinds.

On one hand, we saw the rise of top streaming stocks such as Roku (NASDAQ: ROKU) and FuboTV (NYSE: FUBO). Over the past year, both stocks have more than tripled in value. This would be thanks to growing cord-cutting trends that were accelerated by the pandemic. On the other hand, in-person entertainment companies continue to gain momentum right now as well. Take United Airlines (NASDAQ: UAL) and Penn National Gaming (NASDAQ: PENN) for example. Both companies' shares are looking at year-to-date gains of over 50%. Given all of the positive vaccine news lately, I can understand why.

All this paired with the latest round of stimulus checks could set up a perfect storm for the entertainment industry overall. As such, new and old investors alike would be looking for the best entertainment stocks to invest in now. After all, people will likely continue to spend their discretionary dollars on means of entertainment. Could this mean long-term growth potential for these four entertainment stocks in focus now?

Entertainment Stocks To Watch This Week

Lizhi Inc.

For starters, we will be looking at Chinese entertainment company, Lizhi. The company operates via a cross-border audio ecosystem. The likes of which are made up of audio-based social networks, podcasts portfolios, and audio communities. Through its online platform, Lizhi reported catering to over 58 million monthly active users in its recent quarter fiscal. If anything, Lizhi's audio-focused social media offerings would set it apart amidst the competition. In fact, LIZI stock soared by over 29% on Tuesday thanks to a research analyst who shares a similar sentiment.

entertainment stocks (LIZI stock)
Source: TD Ameritrade TOS

Diving right into it, Citron Research editor Andrew Left set a price target of $30 a share for LIZI stock. This represents a premium of 119% over its closing price of $13.65 yesterday. In detail, Left suggests that Lizhi is a "cross-section of Clubhouse, Roblox (NYSE: RBLX), and now dating." The reason for this is that Lizhi's Tiya app launched a new ad regarding the company's expansion into online dating.

Not to mention, Lizhi is also making moves in the automotive industry. The company revealed earlier this month that it is partnering with ECARX, a leading automotive intelligence tech company. With Lizhi improving its existing offerings while expanding its portfolio towards booming industries, could LIZI stock be worth watching now? You tell me.

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Yala Group Limited

Similar to our previous entry, Yalla is a social networking and entertainment platform. The company focuses on providing customers from the Middle East-North Africa (MENA) community with superior online social experiences. Through its flagship mobile app of the same name, users can spend time chatting in virtual chat rooms. Additionally, users can also play a variety of board games together on the app via the company's Yalla Ludo platform. More importantly, YALA stock is looking at gains of 13% since Yalla announced its latest financial results on Monday.

top entertainment stocks (YALA stock)
Source: TD Ameritrade TOS

In it, the company posted a whopping 150% year-over-year jump in total revenue. Moreover, Yalla saw massive year-over-year surges of 295% in average monthly active users and 624% in paying users. Given these stellar figures, I can see why investors were keen to flock to YALA stock this week. Similarly, Wall Street appears to be bullish on the MENA-focused social networking company as well.

Namely, Oppenheimer analyst Bo Pei reiterated an outperform rating on the stock with a price target of $30. Overall, Pei cites Yalla Ludo's strong performance throughout the quarter as a key growth factor for the company. With Yalla as the leading social network company in the MENA region, will you be watching YALA stock?

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Despegar.com Corporation

Next, we have leading Latin American online travel company Despegar. In brief, the company operates across 20 countries, providing a comprehensive suite of travel products and services. Furthermore, the company's one-stop marketplace allows Despegar's over 17 million users to find, compare, and plan their vacations. Through Despegar's websites and mobile apps, customers have access to over 300 airlines and more than 520,000 accommodation options across Latin America. Some might consider it the Latin American equivalent of Tripadvisor (NASDAQ: TRIP). Like most of its peers in the travel industry, DESP stock is on the uptrend. Over the past year, the company's shares have gained by over 140%. In particular, DESP stock surged by over 9% during intraday trading yesterday on account of an analyst upgrade.

best entertainment stocks (DESP stock)
Source: TD Ameritrade TOS

To explain, KeyBanc Capital Markets raised DESP stock to an Overweight rating with a price target of $23. This would mark an upside of 35% given DESP stock's value as of yesterday's closing bell. Analyst Edward Yruma cites "strong secular tailwinds" and promising signs from the company's earnings as a reason for this upgrade. Ideally, Despegar would be in a good position to benefit from reopening travel markets. For investors looking towards more affordable reopening plays, DESP stock could be a go-to. Would you agree?

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Discovery Communications Inc.

Discovery Inc. is an upcoming name in the streaming industry right now. For the uninitiated, Discovery is a mass media company that boasts a massive portfolio of unscripted content. This ranges from wildlife documentaries to lifestyle improvement programming. For one thing, Discovery would be bringing its classic cable TV programming towards the streaming medium. This does set it apart from conventional streaming services because of its unique content.

top entertainment stocks to watch (DISCA stock)
Source: TD Ameritrade TOS

Notably, the company's Discovery Plus platform could appeal to older audiences more compared to most mainstream players in the industry. Could this make DISCA stock worth investing in now? Evidently, investors appear to think so seeing as DISCA stock continues soaring to new heights gaining by over 140% year-to-date.

Despite only launching in January, Discovery Plus has picked up over 11 million paying subscribers as of last month. Nonetheless, the company projected that this figure would cross the 12 million subscriber mark by the end of February. Generally, Discovery's shift towards the streaming market is a timely one. In this case, I could see consumers jumping on its streaming service in the wake of cable TV declines. Moving forward, the company also noted that it would be focusing on bolstering Discovery Plus' offerings. It would have the means to do so, considering its $2.38 billion of free cash flow from fiscal 2020 operations. Could this make DISCA stock worth adding to your watchlist now? I'll let you decide.

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