3 entertainment stocks poised for a comeback after last week’s market crash

August sent investors into a frenzy, with massive volatility rocking the major indexes. Yet amid the chaos, betting on the best entertainment stocks in decline could prove wise.

In the context of falling interest rates, entertainment stocks offer a particularly attractive opportunity. Additionally, with corporate profits expected to rise, the sector stands to gain significantly from the resilience of discretionary spending.

This scenario is supported by JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon’s recent comments that they feel relatively confident about the economic outlook despite current volatility. Furthermore, he talked about how the unpredictable nature of market reactions serves as a reminder for investors to focus on long-term fundamentals.

That said, as we navigate the August turbulence, it’s important to avoid catching all the falling knives and bet on the best bets in the entertainment space. These stocks have attractive long-term catalysts in play, providing a healthy upside going forward.

Entertainment Stocks to Buy: Take-Two Interactive Software (TTWO)

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Take-Two Interactive Software (NASDAQ:TTWO) is the power behind some of the most iconic game franchises in the grand theft auto (GTA) and Red Dead Redemption.

Although recent sales and net bookings have declined, the latest iteration of the grand theft auto the GTA6 series could break sales records once it hits the scene in the fall of 2025. What’s more, according to recent reports, the game will arrive on schedule, allaying concerns about a potential delay. Given the excitement surrounding the game’s release, TTWO shares could surpass the all-time high price of $213.34.

Analysts expect GTA6 to generate a massive boost to the company’s sales, potentially leading to a 50% increase over the next 16 months. Moreover, despite the headwinds, the outlook for fiscal 2026 remains robust, with projections pointing to EPS growth in excess of 200%. Other catalysts like mobile gaming and cost-cutting measures could set the stock up for monster gains down the road. However, the stock has lagged of late, trading 14% off its 52-week highs, indicating an attractive buying opportunity.

Netflix (NFLX)

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Netflix (NASDAQ:NFLX) is probably the clear standout in the entertainment space, with its ubiquitous streaming platform serving over 278 million paying subscribers.

Despite its large size and crowded streaming market, the company’s subscriber base has grown at a healthy pace. In its most recent quarter, it added eight million new subscribers, underscoring its strong positioning. Moreover, once the dust settles on the freeloader crackdown and the launch of the ad-based tier, NFLX stock is positioned for superb gains.

In its most recent quarterly release, its sales were up 17% year-over-year (YOY), thanks to popular original content and a growing ad business. Following these robust earnings, Netflix raised its sales growth forecast to 14% to 15% from its previous range of 13% to 15%. In addition, according to the second quarter, it has the largest market share in streaming, capturing 22% of the fast-evolving space.

As we look ahead, Netflix still has plenty left in the tank, bolstered by the introduction of live sports, video games and a bold expansion into India as major long-term catalysts.

Disney (DIS)

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Disney (NYSE:early) strategic pivot to streaming under CEO Bob Iger has proven a boon for its overall business. His flagship, Disney+burst onto the scene during the pandemic, amassing an astounding 100 million subscribers in just 16 months. The timely release, coupled with its strong content offerings, has propelled Disney to the forefront of the streaming wars. Lately, despite the headwinds, Disney’s streaming segment continues to lead, supported by a killer combination of Disney+, Hulu, and ESPN+ turning a profit for the first time.

The strong combination helped generate a superb $47 million in operating income in its most recent quarter. This financial increase contrasts with the $512 million loss reported in the prior year period. In addition, Disney’s unique strategies, including price adjustments and rigorous cost control, have led to a superb turnaround. Its streaming division alone reported a 15% increase in revenue to $6.4 billion.

As we look ahead, Disney is planning more price increases to balance demand while maintaining margin growth. This approach, along with its dominant slate of content for cinema, television and sports broadcasting rights through ESPN+, positions it for long-term gains.

At the time of publication, Muslim Farooque did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publishing Guide

At the time of publication, the responsible editor had (neither directly nor
indirectly) any positions in the securities mentioned in this article.