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3 Top Entertainment Stocks to Watch in September

By Demitri Kalogeropoulos – Sep 9, 2021 at 9:00AM

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It's a crowded market, but these leaders should keep winning.

The stock market has been roaring through the first eight months of 2021 with gains easily outpacing the long-term annual average. That surge could set investors up for a tough final quarter if economic growth slows -- or it might just set the stage for bigger gains ahead.

Among sectors, the entertainment industry is worth watching in September for attractive deals that could be on offer for investors. With that in mind, let's look at why Netflix (NFLX 1.09%), Activision Blizzard (ATVI 0.76%), and Walt Disney (DIS 0.85%) should be on your stock radar this month.

A person watching TV while drinking coffee.

Image source: Getty Images.

1. Netflix

The stock of streaming service Netflix is climbing back into Wall Street's good graces. Following a slump after management announced two straight quarters of surprisingly slow subscriber growth, shares are again approaching all-time highs on hopes of an epic end to the year.

That's because the weak 2021 start probably marked just a temporary hiccup as the soaring pandemic-related gains of late 2020 were followed by slower growth when the threat seemed to wane.

In late July, co-CEO Reed Hastings and his team predicted a return toward normal growth trends in the third quarter, which ends in late September. This month will see a stepped-up content release schedule -- and Netflix's content pipeline is especially packed for the fiscal fourth quarter, usually its strongest period of the year. Investors will get a detailed look at the streaming video leader's outlook when the company announces Q3 results in mid-October.

2. Activision Blizzard

September brings some major content releases for video game developer Activision Blizzard. That list includes updates across the Call of Duty franchise and a remastered version of its hit Diablo II title -- a key step in management's plan to dramatically expand that brand. The company is hoping to do to Diablo what it did to Call of Duty: use free-to-play and mobile iterations to grow the user base.

Wall Street has lost interest in Activision Blizzard's stock lately. Key risks today include a potentially costly challenge from regulators about its workplace environment plus the potential for a pronounced growth slowdown following last year's soaring gamer engagement.

But heading into the critical fourth quarter, Activision's operating trends are as strong as ever. That period will include its single biggest launch of the year, Call of Duty: Vanguard.

3. Disney

Entertainment behemoth Disney is planning a huge finish to its fiscal year, which ends in early October, including a new live-action release from Marvel Studios. That's just one reason to like the entertainment giant's stock, which has been one of the worst performers of the Dow so far in 2021.

Sure, Wall Street is concerned that pandemic pressures could continue to affect the parks and resorts segment into 2022. Disney's finances have taken a big hit from the reduced capacity since early 2020.

Yet these are temporary challenges that shareholders might strain to remember in a few years. In the meantime, they'll rack up returns from owning a major streaming video player, the perennial leader in blockbuster movie releases, and one of the most diversified entertainment empires around.

Demitri Kalogeropoulos owns shares of Activision Blizzard, Netflix, and Walt Disney. The Motley Fool owns shares of and recommends Activision Blizzard, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.

Stocks Mentioned

Netflix Stock Quote
$320.41 (1.09%) $3.46
Walt Disney Stock Quote
Walt Disney
$99.43 (0.85%) $0.84
Activision Blizzard Stock Quote
Activision Blizzard
$75.76 (0.76%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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