The proportion of income that Britons were spending on leisure activities was booming before the Covid-19 outbreak. And while the coronavirus crisis drags on, people’s appetite to get out and about again is bouncing back. This bodes well for ‘almost’-penny stock and cinema operator Everyman Media Group (LSE: EMAN).
According to Statista, more consumers were intending to spend more on culture and entertainment in the second quarter (with a net balance of +13%). What’s more, spending intentions for eating and drinking out were even stronger (with a balance of +16%). These played into the hands of Everyman, a cinema operator whose venues allow people to dine, drink and watch movies.
In fact trading has been better than even the firm expected since it reopened its 33 venues in mid-May. Admissions up to 1 July were at 66% of 2019 levels, even though social distancing requirements remained in place.
Everyman’s boutique cinemas offer a more distinctive experience than the likes of Odeon and Cineworld. This also helps it to fight off the threat posed by the streaming companies like Netflix better than the competition. I’d buy this ‘nearly’-penny stock despite the threat of fresh Covid-19-related lockdowns amid increasing infection rates.
Another ‘almost’-penny stock I’d buy
The amount that streaming companies Netflix, Disney, Apple and Amazon are spending on content is rocketing. Cash spend on the creation and licensing of fresh content soared to $220m in 2020 as these US giants fought for supremacy, according to Purely Streamonomics.
It doesn’t look like the party’s over, either. According to Purely: “Even more spending growth is on the short-term horizon as a new wave of ad-supported platforms start gaining a stronger foothold around the world.” Added to predicted spend from subscription-based services, Purely thinks total expenditure will surge to a new record of $250m in 2021.
All this bodes well for Zoo Digital Group (LSE: ZOO). This stock provides a range of services for streaming companies, broadcasters and movie studios. These include overlaying dubbing and subtitles on programming, managing script creation and ensuring that content is compliant across regions.
Revenues at Zoo Digital exploded “at least” 51% year-on-year between January and June, to $25m, the UK share’s latest update in August showed. It said that services to support the migration of existing shows onto streaming platforms, allied with the subsequent launch in new territories helped to drive the top line.
The former penny stock added that it had received orders related to new titles “in recent weeks.” And it said that it expects “the associated pipeline of work will build gradually over the coming months.” It’s worth remembering that business could cool if Covid-19 cases continue to rise and creative industries are forced to close down again. But this wouldn’t stop me buying Zoo Digital shares today. I think the future is very bright here as the streaming industry goes from strength to strength.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Apple, Netflix, and Walt Disney. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.