Netflix, Inc. NFLX recently registered a fascinating third quarter as it experienced a healthy uptick in profit as well as subscriber additions. Bullish sentiment about the company’s performance heading into the third quarter has grown, with many analysts jacking up their price targets for the streaming giant.

The popularity of Netflix’s drama from South Korea – Squid Game – helped the company add more subscribers in the third quarter than what was expected. Citing a MarketWatch article, per FactSet, Netflix added 4.4 million new subscribers in the third quarter, topping its own forecast of 3.5 million and surpassing average analysts’ projection of 3.78 million.

As many as 142 million households across the globe have watched the hit series since its debut on Sep 15, as mentioned in the MarketWatch article. Now, Squid Game is the most-watched new show in Netflix’s history. Other programs also helped Netflix garner more subscribers. Notable among them are “The Chestnut Man”, “Money Heist” and “Sex Education,” to name a few. It’s also worth pointing out that the Asia-Pacific region turned out to be the largest contributor toward Netflix’s membership growth in the third quarter.

Netflix, at present, has been able to maintain an edge over rivals like Comcast, Walt Disney, Apple, AT&T, and Amazon in the streaming space. What’s more, the company now expects 8.5 million more customers to sign up for its programs in the final three months of this year, more than Wall Street’s estimate of 8.41 million new subscribers during the said period, per FactSet, as mentioned in an investors.com article.

Netflix, nonetheless, had earned $1.45 billion or $3.19 a share in the third quarter, up from $1.74 a share compared to the same period a year ago, per FactSet, as stated in the MarketWatch article. Similarly, the article noted that revenues came in at $7.48 billion in the third quarter, up from $6.44 billion in the year-ago period.

Thus, solid third-quarter earnings results helped Netflix’s shares increase 0.2% on Oct 19, while the company closed at $639 during the trading session. Anyhow, Netflix’s shares have been on a tear in recent times, rallying 34% from its 2021 low in May, as quoted in a livemint article.

Several analysts have further raised the company’s price target, banking on encouraging third-quarter earnings results as well as expectations about additional subscriber growth in the current quarter. For instance, Mark Mahaney of Evercore ISI and Morgan Stanley analyst Benjamin Swinburne have raised Netflix’s price target for this year, banking on a slate of new series lined up to be released in the fourth quarter.

However, from an investment standpoint, Netflix is already very pricey and a further price increase may burn a hole in small investors’ pockets. Lest we forget, Netflix has a price-to-earnings (P/E) ratio of 61.32, way more than the industry average of 15.17. Hence, it’s prudent for investors to invest in media companies trading cheap with superb growth potential. We have thus selected three such stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Roku, Inc. ROKU operates a TV streaming platform. The stock currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 22.9% in the past 60 days. The company’s expected earnings growth for the current year is 1,057.14%. Roku closed at $344.45 on Oct 19, way less than Netflix’s settlement price. You can see the complete list of today’s Zacks #1 Rank stocks here.

Entravision Communications Corporation EVC operates as a media, marketing, and technology company worldwide. The company operates through three segments: Television, Radio, and Digital. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 10.8% in the past 60 days. The company’s expected earnings growth for the next year is nearly 22%. Entravision Communications closed at $7.65 on Oct 19.

Cumulus Media Inc. CMLS is an audio-first media and entertainment company. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-year earnings has moved up 1.8% in the past 60 days. The company’s expected earnings growth for the current year is 77.2%. Cumulus Media closed at $12.77 on Oct 19.

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