Millions of Americans have "cut the cord." However, consumers' entertainment experience has ended up as a collection of one or more services that looks a bit like cable or satellite, without the cords.
That's because the streaming model and what consumers desire are at odds. Streaming services need to capture as many eyeballs as they can with as much content as possible. However, many streaming consumers only want a fraction of that content. When you consider that consumers have to buy content from multiple streaming services, you can see how consumers wonder whether they actually save money at all.
Consumers don't want to go back to the ways things were. There's evidence that streaming companies will adapt to stand out in a sea of sameness. In this special presentation, we're giving you our thoughts on seven streaming stocks that present investors with long-term opportunities.
Quick Links
- Comcast
- Disney
- Apple
- Amazon
- Spotify
- Alphabet
- Edgio
#1 - Comcast (NASDAQ:CMCSA)
Comcast (NASDAQ:CMCSA) is perhaps best known for its cable TV service. Make no mistake, Comcast is a bona fide player in the streaming game. The company is the owner of NBC Universal, which puts Peacock under its umbrella.
The company has the ability to bundle Peacock as part of its home internet offerings. In many areas of the country, Comcast is the only option for home internet, so there is a large user base in play.
As for Peacock itself, the streaming service successfully integrates the shows from NBC’s broadcast network (usually on a “streams the next day” basis). It has its own web of content, such as the show "Yellowstone." Consumers will get the ability to view movies that launch from NBCUniversal. Add in the live sports component with offerings like Sunday Night Football, Major League Baseball, Notre Dame football and Premier League soccer and you'll realize that this is a must-have service for many consumers.
About Comcast
Comcast Corporation operates as a media and technology company worldwide. It operates through Residential Connectivity & Platforms, Business Services Connectivity, Media, Studios, and Theme Parks segments. The Residential Connectivity & Platforms segment provides residential broadband and wireless connectivity services, residential and business video services, sky-branded entertainment television networks, and advertising.
Read More - Current Price
- $38.22
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $47.06 (23.1% Upside)
#2 - Disney (NYSE:DIS)
You'll hear a lot of Disney (NYSE:DIS) noise, but as an investor, it's worth considering what consumers do as opposed to what they say they'll do. If you’re a consumer with small children, you’re likely going to buy into Disney’s streaming service, Disney+, at some point.
The immense Disney library offers content that consumers cannot access anywhere else. Disney also owns ESPN, which gives it access to an adjacent customer base and a link to live sports that it can capture through the ESPN+ service.
The company is known for its theme parks, but in its third quarter 2022 earnings report, Disney added over 14 million Disney+ subscribers and posted a year-over-year gain of 53% in ESPN+ subscribers. As an investor, this contributes to a "sum of all of its parts” argument for owning DIS stock.
About Walt Disney
The Walt Disney Company operates as an entertainment company worldwide. It operates through three segments: Entertainment, Sports, and Experiences. The company produces and distributes film and television video streaming content under the ABC Television Network, Disney, Freeform, FX, Fox, National Geographic, and Star brand television channels, as well as ABC television stations and A+E television networks; and produces original content under the ABC Signature, Disney Branded Television, FX Productions, Lucasfilm, Marvel, National Geographic Studios, Pixar, Searchlight Pictures, Twentieth Century Studios, 20th Television, and Walt Disney Pictures banners.
Read More - Current Price
- $112.03
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $123.58 (10.3% Upside)
#3 - Apple (NASDAQ:AAPL)
Apple TV has been around for a long time, but initially it existed as a delivery method. The company has since gotten into the field of original content with shows like "Ted Lasso" and "Severance," among others.
Apple (NASDAQ:AAPL) makes our list because of its commitment to live sports. This has been the Achilles' heel of streaming services, but Apple has already started contracting with Major League Baseball for the exclusive broadcast rights to some games. As of this writing, it’s the leader in the attempt to win the NFL Sunday Ticket starting in 2023.
Right now, savvy consumers sign up for a service, binge watch the content they want, then cancel the service after they're done watching. The link to live sports can help providers like Apple become sticky with consumers, particularly when they watch content on their iPhones or iPads.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $254.49
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $236.78 (7.0% Downside)
#4 - Amazon (NASDAQ:AMZN)
So far, you've probably noticed a theme — a link to live sports — which continues with Amazon (NASDAQ:AMZN). The company is also a player for the rights to the NFL Sunday Ticket. Whether or not it gets that, it already has the rights to the NFL’s Thursday Night Football. As of this writing, it’s still too early to tell whether it will succeed. If successful, Amazon will start to make a larger push into this area.
Due to its dominance in e-commerce, Amazon may have less concern over losing its Prime customers. At the same time, that gives many consumers a reason to sign up for the service. Streaming may never be Amazon’s bread and butter, but the fact that it doesn’t have to be is what sets the company up for success in this market.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $224.92
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 42 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $243.00 (8.0% Upside)
#5 - Spotify (NYSE:SPOT)
Streaming isn’t just about video. Spotify (NYSE:SPOT) is one of the leading names in streaming audio. Several years ago, Spotify made a deliberate pivot to emphasize original content via podcasts. Love him or hate him, Joe Rogan is exclusive to Spotify and garners millions of listeners.
Those listeners will likely engage with other areas of the platform and many will become Spotify Premium subscribers, which is the ad-free version of Spotify.
The question for investors is when (or if) Spotify will ever become profitable. Spotify has recently begun competing in the audiobook arena, a pay-per-use service. This puts the company in direct competition with Amazon and It’s too early to gauge its chances. If the company provides original titles that consumers can’t get elsewhere, it could be another revenue driver for the company.
About Spotify Technology
Spotify Technology SA, together with its subsidiaries, provides audio streaming subscription services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
Read More - Current Price
- $460.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 22 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $429.96 (6.7% Downside)
#6 - Alphabet (NASDAQ:GOOGL)
Alphabet (NASDAQ:GOOGL) is on this list because it owns 100% of YouTube, one of the major content creators on the internet. It’s a platform that allows virtually anyone to post content. How many times have you said, "I’ll look at a YouTube video to learn how to do 'X'" — per day?
This also means that Alphabet owns YouTube TV, which is like paying for what you might get from cable TV without a cord. It’s a popular alternative to Hulu and also to an upstart like FuboTV (NYSE:FUBO).
As more individuals look to cut the cord, particularly from services like DirecTV, YouTube TV will likely become a popular alternative. Consumers would still have to add different streaming services for their original content, but there may be a niche for YouTube TV, particularly for people who already own Roku (NASDAQ:ROKU) devices.
About Alphabet
Alphabet Inc offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.
Read More - Current Price
- $191.41
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 35 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $206.69 (8.0% Upside)
#7 - Edgio (NASDAQ:EGIO)
At this point, we've been focused on streaming providers. However, another way to play this sector involves the companies that operate behind the scene. Edgio (NASDAQ:EGIO) is a good example.
Edgio, formerly known as Limelight Networks, is a content delivery network (CDN) that provides the backend streaming technology used by several of the companies on this list. The company says its products make “connected living faster, safer and simpler to manage by powering unmatched speed, security and simplicity at the edge with our seamlessly integrated delivery, applications and streaming solutions.”
Since these companies will be pumping out more content, not less, the value of EGIO stock will likely increase.
Keep in mind that this small-cap company just posted its first profitable quarter. However, the company’s revenue continues to increase. As of October 3, 2022, analysts surveyed by MarketBeat gave the stock a $4.67 consensus price target, which gives the stock a 64% upside from its current level.
About Edgio
Edgio, Inc provides edge-enabled software solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates private global networks with distributed computing resources and extensive connectivity to last-mile broadband network providers; offers live and on-demand video delivery services; and provides platform, media, and application solutions.
Read More - Current Price
- $0.00
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $10.00
It's understandable if investors think they've missed out on the window for investing in streaming stocks. Perhaps they did on the first wave. But trends like this tend to have multiple growth cycles. Consider that Netflix started as a rent-by-mail business. Or that as recently as a few years ago, Apple and Amazon weren't in the streaming business.
So it's likely that there will be more growth ahead. Streaming providers will get a better sense of what consumers want and how to deliver it in a cost-effective way.
When you look at some of the names in this presentation, it won't surprise you that many of them are established companies that will have the financial resources to be a player in this market, no matter what happens in the economy. We believe that that growth-minded investors should always consider that factor.
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