2012 saw a lot of ambitious films take the big screen from “The Hunger Games” to “The Dark Knight Rises” to “Prometheus.” And while none of these movies were a critical hit, they drove box office sales and stock prices. The Dark Knight alone grossed over $1B. Movie theater chains followed. Carmike (CKEC), Cinemark (CNK), and Regal (RGC) have all seen surges in performance as movie-goers shell out for large productions in a struggling industry.
Especially with the increase in profitability last year in stocks like Lions Gate (LFG) (123.85% return) and Carmike (CKEC) (86.72% return), there may still be the time to get in the movie business as summer cools down and skeptics emerge. It’s critical to remember that the profitability of these blockbusters is tied to more than just a ticket. It’s the IMAX (IMAX) experience, cultural paraphernalia, book sales, and other franchise flotsam that makes these blockbuster stocks so appealing
Here are some flicks to keep an eye out for:
“The Bourne Legacy”
This one’s already out now but Universal Studio’s continues to squeeze profits from the series. The tagline “There was never just one” has led to the satirical title “The Bourne Redundancy” but for NBCUniversal, ticket sales are also replicable with $98.3M gross in the US so far compared to the $69.2M The Bourne Ultimatum raked in on opening weekend.
“Lincoln”
The popular President is in the spotlight again. He’s got a traveling exhibition with the New York Historical Society and at least two high-profile films this year. The first one, “Abraham Lincoln Vampire Hunter” will only go down in history for its comically sincere trailer. Though it recovered little over half its cost in the U.S., the film fared well-enough worldwide to turn a profit. The upcoming Lincoln starring Daniel Day-Lewis is set to do much better. 20th Century Fox (NWS) seeks to gain from this one.
“Skyfall”/”The Hobbit”
MGM post-bankruptcy and still private has hinged itself on two epic icons: James Bond and The Hobbit. Both have been turned into trilogies to the ire and excitement of fans, critics, and movie-goers. Their partnership with Warner Bros. (TWX) on two “Hobbit” installments is sure to spur sales.
In the pipeline: “GI Joe: Retaliation” in March followed by “RoboCop” next August.
Business Section: Investing Ideas
Whether or not any of these movies attain cinematic merit, their successive installments are going to be paying dividends through countless (really almost endless) opportunities for tie-ins, action figures, video games, amusement park rides, comic books, even songs (see Kanye West’s ‘RoboCop’). Jakks Pacific (JAKK) rose 17.89% on Disney merchandise, but Hasbro (HAS) will be the one to watch next year.
Activision (ATVI) currently has exclusive rights to any James Bond games coming up though nothing for “Skyfall” has been officially announced. And if history repeats itself, Pearson’s publishing arm, Penguin (PSO), will see revived interest in Ian Fleming’s original 007 stories.
A throwback to summer, expect big names and big tie-ins. With that in mind, here are some stocks to consider:
List Average 1-Year Return: 25%
1. REGAL ENTERTAINMENT GROUP (RGC, Earnings, Analysts, Financials): Operates a theatre circuit in the United States. Market cap at $2.18B, most recent closing price at $14.03.
2. Carmike Cinemas Inc. (CKEC, Earnings, Analysts, Financials): Operates as a motion picture exhibitors in the United States. Market cap at $216.2M, most recent closing price at $12.16.
3. Cinemark Holdings Inc. (CNK, Earnings, Analysts, Financials): With its subsidiaries engages in the motion picture exhibition business. Market cap at $2.71B, most recent closing price at $23.57.
4. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Market cap at $42.58B, most recent closing price at $44.87.
5. Hasbro Inc. (HAS, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of games and toys. Market cap at $5.07B, most recent closing price at $38.96.
6. Activision Blizzard, Inc. (ATVI, Earnings, Analysts, Financials): Publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Market cap at $13.31B, most recent closing price at $11.98.
7. Pearson plc (PSO, Earnings, Analysts, Financials): Engages in education, business information, and consumer publishing businesses worldwide. Market cap at $15.74B, most recent closing price at $19.27.
8. News Corp. (NWSA, Earnings, Analysts, Financials): Operates as a diversified media company worldwide. Market cap at $58.16B, most recent closing price at $24.60.
Written by Freda Ding
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