47% upside: Expert names 2 entertainment ASX 200 shares to buy for cheap

Happy family watching Netflix together.Happy family watching Netflix together.

There is a school of thought that the entertainment industry is one that can remain resilient through economic downturns.

The idea is that consumers will stay home more and watch television or streaming services, or gamble as a distraction from a troubled world.

After ten consecutive months of interest rate rises, this theory is about to get a sore workout in Australia.

Here are two ASX shares that fit the bill that one expert is recommending as buys:

‘Fundamentals are strong’

Nine Entertainment Co Holdings Ltd (ASX: NEC) operates a free-to-air television network, streaming service Stan, as well as a national stable of newspapers and radio stations.

Ord Minnett senior investment advisor Tony Paterno was impressed with what the company presented during the reporting season.

“The diversified media giant posted group revenue of $1.403 billion in the first half of fiscal year 2023,” Paterno told The Bull.

“This represented a 5% increase on the prior corresponding period.”

Paterno was not too worried about net profit after tax, which was down 16%. 

“Group fundamentals are strong, backed by a solid balance sheet,” he said.

“In our view, the shares were trading at a discount at $1.91 on March 2. We retain our $2.80 fair value estimate.”

The television network also scored a coup last month when it secured the broadcast rights to the next five Olympic games.

The Nine share price is down more than 27% over the past 12 months.

‘The offer is appealing’

Star Entertainment Group Ltd (ASX: SGR) has seen its share price halve over the past year as multiple government enquiries questioned its fitness to hold its casino licences.

But with new management installed, perhaps it can’t get any worse.

Paterno noted the company raised some much-needed cash with a $595 million institutional issue at $1.20 per share.

“Star Entertainment expects to raise about $205 million from its retail entitlement offer. The offer will close on March 13,” he said.

“The capital initiatives will dilute our fair value estimate, but we believe the offer is appealing on valuation grounds.”

The money will be used to pay off debt and provide “liquidity headroom”, according to Paterno. 

“New South Wales and Queensland regulators have imposed fines totalling $200 million on Star Entertainment,” he said.

“Shareholders should examine the retail entitlement offer before investing.”

The post 47% upside: Expert names 2 entertainment ASX 200 shares to buy for cheap appeared first on The Motley Fool Australia.

One “Under the Radar” Pick for the “Digital Entertainment Boom”

Discover one tiny “”Triple Down”” stock that’s 1/45th the size of Google and could stand to profit as more and more people ditch free-to-air for streaming TV.

But this isn’t a competitor to Netflix, Disney+ or Amazon Prime Video, as you might expect…

Learn more about our Tripledown report
*Returns as of March 1 2023

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More reading

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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