Madison Square Garden Entertainment Corp. (MSGE) — recently around $102 — is trading at a considerable 35% discount to its net asset based valuation of $3.9 billion, explains Jim Osman, founder of The Edge Consulting Group and editor of Special Situations Lite.

As the unlock seems to be progressing well, the comeback of sports becomes inevitable in the next year as we expect Madison Square Garden and other venues to resume operations in the next 3 to 5 months.

Currently, MSGE's market cap stands at $2.5 billion. Considering its net cash balance of $1 billion (as of Sept 30, 2020), the market seems to be assigning only $1.5 billion in valuation to MSGE’s Iconic assets.

These include Madison Square Garden (12 acres of land worth $1.2 billion), Air Rights (worth $348 million), Christmas Spectacular (valued at $300 million), and Tao Group’s 77.5% stake valued at $335 million, etc.

Hence, even after applying a 25% discount to its asset-based valuation, we arrive at one-year base case target price of $119.66 per share, a potential upside potential of 16.7% from current levels

MoneyShow’s Top 100 Stocks for 2021

The top performing newsletter advisors and analyst are back, and they just released their best stock ideas for 2021. Get your FREE copy of MoneyShow’s 2021 Top Picks report here and see why the nation's leading investment experts believe these stocks will significantly outperform the market in 2021.

The Sphere is a modern venue in creation. In the same vein as Madison Square Garden Arena is the Mecca for basketball as a venue, James Dolan is designing the first-of-its-kind fully immersive experiences on a grand scale in the form of a $1.66 billion investment, 18,000 seated venue in the heart of Las Vegas.

Located next to the Venetian Resort, The Sphere is now expected to start operations in the late 2023 (Till September 30, 2020, the MSGE has spent a total of $556m on construction of The Sphere).

Potential Upside: The bullish case is a target price of $144.59 (at 10% discount to its NAV), suggesting upside potential of 41.1%.

Subscribe to Special Situations Lite here…