Is Madison Square Garden Entertainment (MSGE) the Best Leisure Stock to Buy Right Now?
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We recently published a list of the 12 Best Leisure Stocks to Buy Right Now. In this article, we are going to take a look at where Madison Square Garden Entertainment Corp. (NYSE:MSGE) stands against the other best leisure stocks to buy right now.
According to Allied Market Research, the global leisure travel market had a market size of $1.2 trillion in 2023. It is anticipated to grow at a compound annual growth rate of 18.3% between 2024 and 2033, reaching $6.2 trillion by the end of the forecast period. The rise of social media is one of the key reasons behind the continued growth in leisure travel, as people are gaining increasing awareness and exposure to various industry trends.
The outdoor leisure market is another significant industry in the domain. Outdoor leisure encompasses recreational open-air activities typically conducted in semi-natural or natural environments. According to Business Research Insights, the market was valued at around $13.15 billion in 2024 and is expected to grow at a compound annual growth rate of 6.95% between 2025 and 2033, reaching $24.07 billion by the end of the forecast period.
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A report by Deloitte showed that the leisure industry continued to rebound in fiscal Q3 2024, with total net expenditure increasing from -10.3% in fiscal Q2 2024 to -8.5% in fiscal Q3 2024, reaching the highest level since fiscal Q1 2022. The report showed that nine out of eleven leisure categories reflected increased spending, with short holidays and eating out topping the charts with a 4.7 and 5.5 percentage points increase, respectively.
Although long vacations decreased in popularity due to economic uncertainties and growing expenses, short vacations gained public acknowledgment, as consumers are prioritizing affordability. Casual dining rose by 1.7% year on year, with three new locations opening each week. In addition, live sports, festivals, and concerts drove a 4.1 percentage point increase in net spending on culture and entertainment. Leisure activities at home and pub spending also showed increases, climbing by 1 and 1.7 percentage points, respectively.
However, Deloitte Consumer Tracker anticipates consumer spending to fall in nine out of eleven categories in fiscal Q4 2024. Longer holidays and eating out are expected to have the highest fallout, with a decrease of -8.1 points and -5.9 points, respectively. Cautious consumer spending amid potentially rising inflation and economic uncertainties is anticipated to affect the hospitality industry, necessitating value-driven tactics to attract consumers.
We sifted through stock screeners, online rankings, and ETFs to compile a list of 25 leisure stocks. We then selected the top 12 with the highest number of hedge fund holders as of fiscal Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Stagehands setting up the equipment for a live entertainment event.
Number of Hedge Fund Holders: 46
Madison Square Garden Entertainment Corp. (NYSE:MSGE) is a live entertainment company that provides venues and marquee entertainment content. Its portfolio encompasses a range of venues, including New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, Beacon Theatre, and The Chicago Theatre. These venues showcase several concerts, sporting events, family shows, and special events for millions of guests annually.
Madison Square Garden Entertainment Corp. (NYSE:MSGE) hosts two professional sports franchises: the National Basketball Association (NBA) Knicks and the National Hockey League (NHL) Rangers. The company also produces, promotes, and presents various sporting events, including college basketball, college hockey, professional boxing, esports, wrestling, mixed martial arts, and more.
The company is seeing strong demand for its offerings in the second half of fiscal year 2025, with consumers increasingly demonstrating their desire for shared in-person experiences. Madison Square Garden Entertainment Corp. (NYSE:MSGE) reported revenues of $407 million in fiscal Q2 2025 and an adjusted operating income of $164 million. The company also welcomed the Rangers and the Knicks for the beginning of their 2024-2025 regular seasons and is seeing positive momentum in its economic arrangements with the teams.
Ariel Fund stated the following regarding Madison Square Garden Entertainment Corp. (NYSE:MSGE) in its Q4 2024 investor letter:
“Lastly, Madison Square Garden Entertainment Corp. (NYSE:MSGE) underperformed in the quarter. Despite the delivery of strong earnings results, shares traded lower following a reduction to fiscal 2025 adjusted operating income guidance. The revision was driven by unique circumstances surrounding concert tour cancellations and higher costs associated with bringing sponsorship sales in-house. Nonetheless, with marquee assets such as New York’s Madison Square Garden, Radio City Music Hall, Beacon Theatre and The Chicago Theater, we believe MSGE is well positioned to capitalize on strong demand for live entertainment. Additionally, new sales and renewal activity in the company’s hospitality business remains robust. MSGE recently announced multi-year sponsorship deals with Lenovo, its subsidiary Motorola Mobility, the Department of Culture and Tourism-Abu Dhabi, as well as a multi-year extension of its sponsorship deal with Verizon. In our view, MSGE’s portfolio generates stable cash flow that should enable further deleveraging. At current levels, the company is trading at a significant discount to our estimate of private market value.”
Overall, MSGE ranks 4th on our list of the best leisure stocks to buy right now. While we acknowledge the potential of MSGE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSGE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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