3 Beaten-Down Entertainment Stocks Poised for a Turnaround in 20233 min read
Although the broader economy gradually overcame the pandemic-induced uncertainties this year, inflationary pressures have again sent investors into the back seat. Supply chain headwinds and the geopolitical environment are also hurting most industries.
Worries about a global slowdown and a possible recession loom over the stock market. Market pundits fear that the Federal Reserve’s hawkish stance to tame inflation might push the economy into a recession. A high inflation rate continues to hurt the industry. Inflation in the United States is proving to be much more stubborn than expected.
However, Fed chairman Jerome Powell’s recent comment about lowering the magnitude of the rate hike from December has come as a breather. It is expected that Fed would spike the interest rates by 50 basis points this time instead of 75 basis points.
Year to date, Leisure and Recreation Services industry has declined 36.5%, compared with the S&P 500 decrease of 18.7%. Against the current market meltdowns, all the major market indices are in bear territory. Beaten-down stocks like Caesars Entertainment, Inc. CZR, AMC Entertainment Holdings, Inc. AMC and Live Nation Entertainment, Inc. LYV are currently available at low prices and are likely to make a U-turn in 2023. These stocks have sound fundamentals, which will help drive their share price in 2023.
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Caesars Entertainment: Caesars Entertainment is a diversified gaming and hospitality company based in Reno, NV. The Zacks Rank #2 (Buy) stock has declined 47.2% compared with the S&P 500’s fall of 18.7% and has a VGM score of A. In 2023, the company’s sales and earnings are anticipated to increase 5.6% and 131.5%, respectively, year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company is optimistic about the booking trends as it is witnessing increased bookings for group and convention room nights. The company anticipates an uptrend in bookings to continue in 2023. CZR is focused on sports betting expansion to drive growth. To this end, the company formed a new Caesars Digital segment comprising sports betting, iGaming and poker. The company integrated its digital offerings with Caesars Rewards at online and physical casinos. As of Sep 30, the company operates sports betting in 27 jurisdictions, 19 of which are mobile. Also, it stated the availability of iGaming offerings in 5 jurisdictions.
AMC Entertainment: Headquartered in Leawood, KS, the company engages in the theatrical exhibition business. The company is benefiting from an increase in global attendance. AMC Entertainment is making comprehensive health and sanitation programs, which include enhanced cleaning procedures and upgraded air filtration efforts, to ensure maximum safety for guests.
The Zacks Rank #2 company’s shares have declined 78.1% year to date. However, the company’s robust earnings and sales growth rate for 2023 is likely to drive the stock higher. In 2023, the company’s earnings and sales are expected to witness growth of 17.3% and 72.5%, respectively, year over year.
Live Nation Entertainment: Headquartered in Beverly Hills, CA, Live Nation Entertainment operates as a live entertainment company. Although the Zacks Rank #3 (Hold) company’s shares have declined 40%, it has a VGM score of B. In 2023, the company’s sales and earnings are anticipated to increase 3.9% and 121.7%, respectively, year over year.
The company is likely to benefit from pent-up demand for live events and robust ticket sales. This and the increased demand for digital ticketing and contactless transactions bode well. The company is optimistic about its growth prospects in 2023. Emphasis on cost-saving efforts bodes well. For shows in 2023, the company is witnessing even stronger ticket sales. In 2023, the company expects to add more venues to its operating portfolio. In terms of tickets, the company is likely to benefit from the market pricing trend.
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