Many entertainment companies have proved quite resilient amid this year's coronavirus-driven market volatility, and growing global demand for entertainment content points to long-term tailwinds for leading companies in the space. 

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Investors looking for top entertainment stocks trading at a discount in August should consider adding Glu Mobile (NASDAQ:GLUU), Eros STX (NYSE:ESGC), and Huya (NYSE:HUYA) to their portfolios. 

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1. Glu Mobile

Glu Mobile stock has dipped roughly 28% since the company reported second-quarter earnings on August 4, presenting a worthwhile opportunity to build a position in a potentially explosive stock at a substantial discount. I'll be buying shares in the video game company after Motley Fool trading window restrictions following the publication of this article have passed, and I expect that staking a bullish position will work out well for patient investors. 

The game publisher's revenue climbed nearly 40% year over year in Q2, but sales of $133.3 million in the period fell short of the market's target for $165.3 million. The average Wall Street target had also called for the company to report earnings per share of $0.03 in the quarter, but the business delivered a per-share loss of $0.05 in the period. Investors shouldn't focus too much on last quarter's loss. 

Bookings for the period (revenue plus the change in deferred revenue) rose 79% year over year and came in significantly ahead of the market's expectations at $182 million. The loss the company posted is hardly worrying in that context, and it's even less concerning when viewed through the lens of the business's long-term growth opportunities. The company has been ramping up spending on user acquisition and building its audience at a time when engagement for gaming is at a heightened level and could help it further drive long-term growth. 

It's not unusual for video game companies to post quarterly expenses that surpass the market's expectations. Costs related to developing and marketing new and existing titles are difficult for analysts to model at the granular level, and strong bookings momentum in Q2 should overshadow the sales and earnings miss for long-term investors. Glu has a series of core video game franchises that are putting up solid performance and illustrating proven staying power, and its pipeline of upcoming titles could pave the way to explosive growth. 

2. Eros STX

Eros International has been India's box office and streaming subscription leader over the last decade, and the company could be poised for big growth as it benefits from tailwinds in its domestic market and expands in new territories. Eros recently completed its merger with film and television company STX, further expanding its production and distribution abilities.

The combined companies are now operating under the Eros STX name, and will conduct a branding and website relaunch in September, along with a switch from its current stock ticker to the ticker ESXI on the New York Stock Exchange. The merger should strengthen Eros's resources and reach, and the potential for growth looks even more attractive following recent sell-offs for the stock. 

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The company's share price has slumped due to fourth-quarter results that arrived with a larger-than-anticipated loss. However, the small-cap company's valuation could skyrocket if the business can deliver hit new content and tap into industry-level growth tailwinds for its theatrical and streaming segments.

India has a population of roughly 1.4 billion people, and the country's entertainment industry still has huge room for expansion. Categories like subscription-streaming memberships and advertising are generating very low revenue per-viewer in the country compared to more developed markets, but that should change as India's economy continues to improve, high-speed internet service becomes more broadly available, and hundreds of millions of people in the country enter the middle class over the next decade.

3. Huya

If you're not closely following the video game industry, it might come as a surprise to learn that hundreds of millions of people around the world spend hours a week watching other people play games. Research from GlobalWebIndex suggests that more than a billion people worldwide tune into streamed video game footage on a monthly basis. Monetization for this content category is also still at an early stage.

Huya is a China-based company that operates a platform for streaming gameplay footage and commentary, and it's a market leader in this far-reaching and fast-growing entertainment genre. The company generates revenue in two core ways: taking a cut of donations that viewers make to their favorite streaming broadcasters and running ads on its platform. Shares are down roughly 1% over the lost month following recent news of a potential merger and the company's second-quarter release. 

Tencent has purchased 30 million shares from Huya's former parent company JOYY and an additional million shares from Huya's CEO Rongjie Dong. The move is part of a plan that would see Huya merged with DouYu (NASDAQ:DOYU), its chief competitor, and controlling stake in the combined company would then be held by Tencent. 

Combining Huya and DouYu could be a move that works out well for shareholders, as the combined entity would be by far the biggest company in the category and enjoy better growth potential and significantly lower operating expenses. Tencent's strengths as China's leading video game company could also bring benefits to the table. On the other hand, Huya shareholders do seem to be concerned about the company losing autonomy if the merger goes through, and there is a risk that Tencent could eventually take the company private -- as it has suggested doing if it completes a proposed acquisition of Chinese search-engine company Sogou.

Either way, the stock looks cheap at present. Tencent's recent purchase of Huya shares was at a price roughly 12% higher than the streaming company's current stock price, and the business delivered strong results in Q2. Sales climbed 34% year over year in the quarter to reach $381.8 million, and adjusted net income rose 106% compared to the prior-year period. The company's core streaming platform added 17.2 million average monthly active users sequentially to reach 168.5 million last quarter, and the business is in a great position to promote and benefit from rising demand for video games as spectator entertainment content regardless of whether the DouYu merger goes through.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.