Investing in the Stay-At-Home Economy
Investing in the Stay-At-Home Economy
By: Stacey Nickens
If you’ve ever been a parent or babysitter, you have likely dreaded the moment your little one complained, “I’m bored!” Yet lockdowns and quarantines may have had you muttering this same phrase to yourself during the past year. With restaurants closed at different periods of time, many of us had to get more creative with our at-home cooking. With movie theatres not as safe to attend, many of us have had to find new movies and TV shows to watch at home. Regardless of what you turned to, certain companies have benefited from this stay-at-home economy. These companies have seen increased demand for their games and media as adults pace around their house, trying to figure out how to find entertainment in between the same four walls. Accordingly, you could consider investing in two different companies whose products have positioned them for growth within this new normal.
Electronic Arts (EA)
Electronic Arts is behind such popular games as FIFA, Madden, NHL, and Sims, all of which can provide for at-home entertainment. However, Electronic Arts hasn’t just relied on the popularity of its classic products. During the past few years, Electronic Arts has effectively competed with the popularity of Fornite by releasing its own battle royal game, Apex Legends. The company has also generated significant growth through its subscription services. These subscription services allow gamers to interact with each other in an online setting. Such offerings have proved popular when many individuals were isolated from friends and family during the past year. Additionally, Electronic Arts has positioned itself within the $1 billion esports industry. Esports, or competitive gaming, is expected to grow over 60% by 2023, and Entertainment Arts has ensured it is at the forefront of this growth. With all of their competitive offerings and products, EA has posted consistent earnings-per-share (EPS) growth for the past six years, with the exception of a slight drop in fiscal year 2020. Analysts further expect this growth to continue as the introduction of new consoles drives the popularity of EA games and after Electronic Arts acquires Codemasters.
ViacomCBS (VIAC)
Viacom is the media giant behind such popular brands as Nickelodeon, CBS News, Paramount Pictures, and others. However, you may have recently heard that their stock value took a hit when the company diluted current shares by pricing 20 million Class B common shares and 10 million preferred shares. Even still, the company’s cash-raising efforts are geared towards making it more competitive within the video streaming industry and could accordingly augment Viacom’s growth moving forward. Viacom has said it plans to invest a substantial amount of this cash into producing their own streaming content, an effort that has made such services as Netflix so successful. Viacom also has a long history of making successful original content as evidenced in its MTV and Nickelodeon programming. With this cash infusion, Viacom could thus be well-positioned to compete with Netflix, Hulu, and Amazon Prime in terms of producing original and popular streaming content. Beyond offering the streaming platform Paramount+, Viacom is behind the free, ad-supported streaming service Pluto TV. Many streamers are unwilling to pay a premium for a subscription service, leading to a large media pirating industry. However, Pluto TV is well-positioned to attract these users who don’t want to pay a fee. Indeed, the streaming service reported 40 million monthly active users in 2020 and continues to see its usership grow. With Viacom stock value currently depressed, VIAC stock is undervalued. It may thus be an opportune time to buy into this growing media company.
