3 Entertainment Penny Stocks to Watch Right Now
Entertainment penny stocks have become synonymous with the pandemic. When Covid first hit the stock market back in early 2020, many of these stocks understandably crashed. But, as time has gone on and vaccine efforts have picked up, many companies have begun to resume operations. It’s important to consider the entertainment industry’s close tie with Covid transmission and vaccine-related news.
When cases go up, entertainment penny stocks tend to go down and vice versa. However, we have also witnessed many big wins in the fight against the pandemic, leading to the overall bullish sentiment surrounding penny stocks with exposure to entertainment.
Many believe that the pandemic has also condensed decades of growth into a period of only one year or so. Because the demand for new forms of entertainment has become incredibly strong, companies have innovated faster than ever before. While not every entertainment penny stock is a major disrupter, we can differentiate them into different categories.
Entertainment Penny Stocks to Buy [or avoid] Right Now
On the one hand, we have innovative and disruptive entertainment companies. These businesses have found new ways to provide physical and digital entertainment during the pandemic. On the other hand, we have companies that are simply resuming operations as the pandemic slows in severity.
In this article, we’re going to look at some different companies related to entertainment. We’re not talking about streaming services, per se. But these companies are involved in a few different types of entertainment we may see at the center of attention this year. Will they be the best penny stocks to buy right now? I’ll leave that up to you.
- Hall of Fame Resort & Entertainment Co. (NASDAQ: HOFV)
- Clear Channel Outdoor Holdings Inc. (NYSE: CCO)
- Drive Shack Inc. (NYSE: DS)
Penny Stocks to Buy [or avoid] #1: Hall of Fame Resort & Entertainment Co.
Shares of HOFV stock have climbed substantially in the past several months. Recently, Hall of Fame has also moved into the NFT space through its partnership with Dolphin Entertainment (NASDAQ: DLPN). This is to produce football-themed NFTs, which could prove to be an advantageous strategic move. In the past year, Hall of Fame has not had the easiest time succeeding.
Given that its assets are based on physical locations such as the Pro Football Hall of Fame in Ohio, stringent covid restrictions have meant low sales and high losses. While its NFT news is only one component of its business, HOFV continues to take every potential route to see long-term success. While it is still vague how this NFT deal will work, it seems like an attempt to bring in new interest.
With a market cap of over $450 million and only $35 million in projected revenue for 2021, investors should consider other value points before viewing HOFV as a penny stock to watch. This means understanding how the slow down of Covid cases could positively affect Hall of Fame’s business. Last week, Hall of Fame announced the extension of its agreement with PepsiCo Beverages North America.
Erica Muhleman, EVP of New Business Development for HOFV, stated that “we are proud to partner with Pepsi to share its products line throughout our Destination assets. This partnership is an example of another world-class organization on our roster of prestigious affiliated brands recognizing our value as a company.”
2. Clear Channel Outdoor Holdings Inc.
Early in 2021, CCO stock had several rough patches. Despite this, the outdoor advertising company still posted better than expected Q4 earnings. As a result of Covid, more people were at home, travel patterns were inconsistent, and CCO’s core makes seemed sparse. While the fourth-quarter consensus was $496 million in revenue, CCO managed $541 million.
This is still, however, a 27% drop over the previous quarter. William Eccleshare, CEO of Clear Channel, stated that “we believe we have entered 2021 in a strong financial position to capitalize on the expected recovery across our markets as we gradually emerge from the global pandemic.”
It’s important to consider that this was a few months ago, and it’s likely that CCO’s financial position has changed for the better since that time. But as we see, the effects of the coronavirus are wide and indiscriminate. Only a month ago, Zacks upgraded its ranking for CCO to a Buy. One of the reasons for this is investors viewing CCO as a “reopening trade.”
One of the major issues present with Clear Channel is its massive debt of over $7.3 billion. The company expects to bring in cash payments of around $361 million in 2021. But, there’s no telling how much this will affect its outlook. Regardless of the prospects, a scenario where the economy begins reopening could present a beneficial opportunity for advertising companies like Clear Channel.
3. Drive Shack Inc.
Drive Shack Inc. is a more pure-play entertainment penny stock. It operates a large range of golf-related leisure and entertainment businesses. Recently, Drive Shack announced that it would be bringing its new business, Puttery, to Penn Quarter, Washington D.C. the Puttery will utilize a 20,000 square foot location originally home to the International Spy Museum.
Hana Khouri, CEO of Drive Shack, stated that “2021 will be an instrumental year in our company growth story, and we’re excited to initiate the next phase of expansion with our entrance into Washington D.C. Puttery will be highly complementary to Penn Quarter’s already strong lineup of existing dining and entertainment options, offering a unique experience for our guests.”
Since Covid is still very present, in-person entertainment is only resuming in a reduced capacity. In its fourth-quarter results posted early last month, Drive Shack recorded a net income of around $10 million with a positive adjusted EBITDA of $5.3 million.
This represents a $7.4 million increase over its EBITDA in the same quarter of the previous year. We see that Drive Shack’s business model is in a good place right now with this information. A lot will depend on what it can do to stay profitable with the pandemic still lingering. But with the potential that its new Puttery brand brings to the table,