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Investing in the good stocks that benefit from secular changes in consumer behavior can dramatically increase your chances of finding a life-changing investment.
On-demand streaming has completely transformed the consumption of traditional media and is now changing the way people exercise. It’s an unstoppable trend that is boosting the stock market performance Walt disney (NYSE: DIS), Spotify technology (NYSE: SPOT), and Interactive Platoon (NASDAQ: PTON).
But the best is yet to come for these three stocks which are surfing unstoppable consumer trends.
Image source: Getty Images.
1. Disney
Disney shares initially fell sharply earlier last year when the novel coronavirus forced the company to temporarily close theme parks, halt cruise operations, and delay film projects, but the course of the stock still managed to generate a return of 19% over the past 12 months. The House of Mouse entered 2020 as a traditional media company, but by the end of the year it had morphed into a streaming-focused business, which could spark a new phase of growth for the media giant.
With an extensive library of classic films to accompany the new blockbuster Star warsseries based The Mandalorian, it didn’t take long for the Disney + streaming service to become a phenomenon. The service has far exceeded initial estimates and the company now plans to reach between 230 million and 260 million subscribers by fiscal 2024, which is expected to bring the total number of subscriptions to its Hulu, ESPN + services. and Disney + between 300 and 350 million.
Even though it’s a bit late for the streaming night, Disney has taken over. WandaVision, a new original series from Marvel Studios, which just launched on Disney +, but there’s a lot more to come. The company plans to launch 10 original series of its two Star wars and the Marvel brands, in addition to 15 original series from its Disney and Pixar studios, over the next several years.
Disney is already planning to increase monthly Disney + subscription fees in select markets as early as March, which will offset increased investment in new content. But management has guided the service to generate a profit by fiscal 2024. Investors should consider buying stocks while the direct-to-consumer business is still in the early stages of growth.
Image source: Getty Images.
2. Spotify
Spotify’s share price has risen 145% since its IPO in early 2018. Although the music streaming platform is already widely used in the United States and Europe, Spotify still has a tremendous opportunity. long-term growth. It is always entering new markets, most recently in Russia, and continues to expand its offering with exclusive podcast content.
The growth in the number of monthly active users has remained constant at around 30% over the past few years, indicating a huge market in which Spotify operates. Despite a slowdown in Spotify’s ad-supported service and lower engagement at the start of the pandemic, global consumption hours on the platform have already returned to pre-COVID levels in the third quarter of 2020.
Spotify believes there is strong pent-up demand as we approach 2021. The recent launch in Russia was more successful than management expected, leading the company to believe there are still plenty of people around the world who are eager to try the service.
Investors should also watch for Spotify’s push into the podcast market, which has exploded in popularity in recent years. Spotify acquired three companies involved in the production and distribution of podcast content in 2019. A fourth agreement was announced in November with the acquisition of Megaphone, which will enhance Spotify’s advertising capacity.
With the short-term positive engagement trends coupled with investments in new markets and content, this leading audio streaming platform could rock your wallet over the next decade.
Image source: Peloton Interactive.
3. Platoon
Remote on-demand workouts have been all the rage lately, and that’s thanks in large part to all those Peloton commercials on TV. The company has invested significant sums in promoting its brand and it is working.
Peloton was already growing rapidly before the pandemic, with revenues nearly quadrupled between fiscal 2017 and fiscal 2019, but Peloton’s momentum has accelerated in recent quarters as more people sought out virus-free exercise alternatives at home.
Revenue jumped 232% year-over-year in the last quarter, living up to its label as the ultimate ‘stay at home’ stock. This level of growth is not sustainable in a post-COVID environment, but Peloton is still a small company relative to its market potential. It only has 1.33 million connected fitness subscribers, or 3.6 million, including Peloton app users, although there are around 200 million people worldwide with paid subscriptions to a gym.
Peloton has seen a strong response from customers for the new Bike + product, and there are certainly opportunities to expand its offering into new categories over the long term, especially products designed for bodybuilding. Its recent acquisition of Precor, a leading commercial manufacturer of fitness products, is expected to strengthen Peloton’s future plans, given Precor’s capabilities in product design and development.
Peloton has grown into a leading brand in fitness, and its ability to make home workouts more personalized and engaging could expand its addressable market beyond just gym subscribers. That said, this is a growth stock that you might wish you had bought in 20 years.
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