3 Media Stocks to Keep an Eye on Before the New Year

The U.S. media and entertainment sector presents compelling investment opportunities heading into 2025, with industry valuations suggesting potential upside amid transformative developments. Trading at 1.14x trailing P/S, significantly below the S&P 500's 5.79x and the Zacks Consumer Discretionary sector’s 2.26X, the Zacks Media Conglomerates industry appears attractively valued for investors seeking growth at reasonable prices. The industry's median valuation of 1.09x indicates room for multiple expansion as media companies like Disney DIS, Reservoir Media RSVR and Paramount Global PARA execute their digital transformation strategies and optimize content investments.Trailing 12-Month Price-to-Sales (P/S) RatioImage Source: Zacks Investment ResearchDigital Transformation and Streaming EvolutionThe media landscape is witnessing a pivotal shift as streaming services mature into profitability. Major players like Disney and Warner Bros. Discovery are setting ambitious targets, with Disney projecting 10% operating income margins by 2026. The emergence of next-generation streaming 2.0, characterized by strategic international partnerships and innovative bundling arrangements, positions these companies for sustained growth. This evolution, coupled with the scaling of advertising on streaming platforms, suggests strong potential for margin expansion.Box Office Recovery and Content OptimizationThe theatrical market is showing robust recovery signs, with 2025 box office projections reaching $9.3 billion, though this remains far below $11.4 billion in 2019. Major studios are strategically managing content investments while maintaining quality production schedules. Disney's expanded Marvel slate besides an Avatar film and Warner Bros. Discovery's anticipated releases, including a new Superman feature, indicate strong content pipelines that could drive substantial revenue growth.Sports Programming and Advertising ResilienceDespite market uncertainties, advertising projections remain strong with expected 4.3% growth in 2025. Sports programming continues to be a cornerstone of value creation, with major broadcast rights secured through 2028. The industry's ability to leverage sports content across both traditional and streaming platforms demonstrates its adaptability and revenue optimization potential.Looking Ahead at 2025The combination of strategic content management, streaming profitability and robust sports programming creates a compelling investment narrative. For investors seeking exposure to the media sector's next growth phase, current valuations offer an opportune moment to consider positions in leading media companies. With the industry's demonstrated ability to adapt and innovate, coupled with strong fundamentals and clear growth catalysts for 2025, media stocks warrant serious consideration for investment portfolios as we approach the new year.Our PicksDisney: This Zacks Rank #2 (Buy) company’s assets include movies, television shows and theme parks. Disney is benefiting from a solid revival in its international theme park and resort businesses. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Recent attractions like the Frozen theme land at Hong Kong Disneyland and Walt Disney Park in Paris, as well as the Zootopia theme land at Shanghai Disney, are expected to boost the prospects of the theme park business. Disney’s iconic California theme park is poised for a magical transformation with significant investment amounting to at least $1.9 billion over the next decade. Disney’s focus on sports streaming, particularly Live Sports on ESPN+, is expected to attract more subscribers. The renewal of the MLB sports rights deal through 2028 and the agreement with Spanish club football’s first division, La Liga, further strengthened the portfolio of the company’s sports content. Strong international growth, particularly in Asia, promises to unlock new revenue streams. The company's robust guidance through 2027, strategic ESPN integration and $3 billion share buyback demonstrate management's confidence.The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has moved north by 0.6% to $5.38 per share over the past 30 days. DIS shares have risen 23.3% year to date. Image Source: Zacks Investment ResearchReservoir Media: This Zacks Rank #3 (Hold) company shines as a compelling player in the music rights industry, boasting a premium catalog of more than 140,000 copyrights across multiple genres. The company's strategic acquisitions of iconic catalogs, coupled with streaming's explosive growth, positions it perfectly for sustained revenue expansion. Its diversified portfolio, including works from artists like Sheryl Crow and Alabama, provides stable and recurring cash flows. Management's proven track record of accretive acquisitions and value-enhancing catalog management drives consistent growth. The rising adoption of music in social media, gaming and new technologies creates additional monetization opportunities.The company has announced plans to raise up to $100 million through an offering of various securities. The move signals Reservoir’s ambition to fuel further growth through acquisitions while reducing its debt. In addition to acquisitions, Reservoir also plans to use a portion of the proceeds to reduce its debt burden, potentially improving its financial flexibility and creditworthiness. The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has remained steady at 7 cents per share over the past 30 days. RSVR shares have risen 20.1% year to date.Image Source: Zacks Investment ResearchParamount Global: This Zacks Rank #3 company stands as an undervalued entertainment powerhouse, boasting an exceptional content library and growing streaming presence through Paramount+. The company's diverse revenue streams — including the CBS broadcast network, popular cable channels like Nickelodeon and a valuable film studio — provide strong cash flow generation. Paramount+ is gaining impressive momentum, leveraging must-watch sports content, hit shows and blockbuster movies to drive subscriber growth. The company's strategic focus on premium content creation and international expansion presents significant upside potential. The integration of Showtime with Paramount+ will further drive the subscriber base. Partnerships with Walmart and Verizon bode well for Paramount+.The Zacks Consensus Estimate for the company’s 2025 earnings has remained steady at $1.86 per share over the past 30 days. PARA shares have lost 27.8% year to date.Image Source: Zacks Investment ResearchZacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Walt Disney Company (DIS): Free Stock Analysis Report Reservoir Media, Inc. (RSVR): Free Stock Analysis Report Paramount Global (PARA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks