3 best sports stocks to buy in June
This year has been difficult for sports fans. The coronavirus pandemic has kept many people locked up at home without hijacking sport. But several sports-related stocks can thrive in this uncertain environment – and may even get a boost when the industry recovers.
Here are three of those stocks to buy in June. The first choice is Walt disney (NYSE: DIS), a diverse entertainment company poised to bounce back from the pandemic. The second is DraftKings (NASDAQ: DKNG), an investment in the growing sports betting industry. The third is XM Sirius Radio (NASDAQ: SIRI), a satellite radio provider that is a market leader in the lucrative sports broadcasting industry.
1. Walt Disney
Walt Disney is a diverse company, blue boat entertainment company that earns its income from a global network of theme parks, movies and its ESPN sports television network. The company was ravaged by the pandemic with closed parks, delayed films and postponed sporting seasons. These challenges have caused Disney shares to fall by about 14% since the start of the year, much worse than the S&P 500, which is down about 1% over the same period. But the company has several important revenue drivers that make it a top sports stock to buy in June, despite the tough economic backdrop.
Disney’s media and streaming segments are relatively resistant to pandemics. And both companies saw significant revenue growth in the second quarter because people are stuck at home. While Disney’s total revenue grew 21% from $ 14.9 billion to $ 18 billion in the second quarter, media network business grew 28% from 5.7 billion to $ 7.2 billion, and direct-to-customer streaming activity grew 273% from $ 1.1. billion to $ 4.1 billion.
Disney’s media networking business faces long-term challenges from the cord-cutting trend, which is expected to affect 25% of all US households by 2022. The segment’s flagship ESPN network is also experiencing a slowdown in advertising sales due to the postponement of sports seasons due to the coronavirus. But the growth of streaming products like ESPN +, Disney +, and Hulu will help offset weakness in the traditional media sector and help Disney further monetize its lucrative intellectual properties and partnerships with major sports leagues.
Disney’s streaming business has a wide divide due to its heavy focus on live sports-related content through ESPN +. This sports component will give Disney’s streaming business an edge over competitors like Netflix that do not offer live sports content. Disney is bundling ESPN +, Disney +, and Hulu into a cost-effective package that will give it an added edge over Netflix for avid sports consumers.
DraftKings is a growth stocks which offers investors the opportunity to bet on the growing sports betting industry. The company went public in April 2020 through a reverse merger with Diamond Eagle Acquisition, a blank check acquisition company designed to allow it to go public without a traditional IPO. Stocks have performed well amid the pandemic, with the stock price climbing 304% since the start of the year.
DraftKings combines its sports betting brand with a betting technology service provider called SBTech. This is a synergistic combination as it allows DraftKings to manage the technological needs of its betting platform without relying on third-party service providers. At present, the company is the only pure and vertically integrated sports betting game on the market.
It’s living a dryness of sports content because the pandemic has interrupted the major American sports leagues. But the company has found a way around this problem by leveraging its non-sports gaming content. In the first quarter, DraftKings expanded its online casino that offers virtual blackjack, roulette and poker. It has also launched new sports betting offerings like eNASCAR, Counter-Strike and Rocket League.
The new offerings helped DraftKings perform well in the first quarter, with revenue increasing 30% from $ 68.09 million to $ 88.56 million, despite the pandemic. The company is poised for continued long-term growth due to its leadership position in sports betting, a market that is expected to grow at a compound annual growth rate of 11.5% through 2027.
Sirius XM is a satellite radio company with exposure to the sports industry through its sports news, commentary and play-by-play channels. The company has a partnership with ESPN which provides two channels, ESPNEWS and ESPN radio, on the platform.
The coronavirus has been a big challenge for Sirius as he has to pay for sports content even though sports leagues are not playing. But this bad situation should improve in the short term. The NBA has a tentative restart date in late July, and the NFL expects to have a full season in 2020. Baseball has yet to confirm a start date, but owners are pushing for play to resume in early July. .
Sirius posted strong first quarter results despite economic challenges from coronaviruses and the suspension of sports seasons. Total revenue increased 12% from $ 1.74 billion to $ 1.95 billion, while net profit increased 65% from $ 162 million to $ 268 million . The company is highly resistant to coronaviruses as around 81% of revenue comes from recurring subscriptions, while the remaining 20% comes from advertising.
Sirius can fuel long-term growth through strategic investments. In February, the company invested $ 75 million in SoundCloud, an open audio ecosystem for new recording artists. This follows an advertising agreement between SoundCloud and Sirius’ Pandora business that allows advertisers to purchase SoundCloud ads directly from Pandora. Sirius XM acquired Pandora in September 2018 for $ 3.5 billion, adding valuable diversification.
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