Why These Hollywood Stocks Are Wall Street Blockbusters

By Rebecca Lipman
Kapitall.com
June 11, 2012

The likes of Netflix, HBOGo, video on demand and free and easy downloading of content from the Internet were all supposed to spell doom for the brick and mortar movie theater, right?

Not so fast. The performance of the movie industry in 2012 indicates that the demise of the box office has been greatly overblown.  

With studio hits such as "The Avengers," "Men in Black 3" and "Snow White and the Huntsman" all bringing in major business to movie houses across the country, year-to-date box office sales are up a remarkable 16.5% over 2011, posting the strongest ticket sales in six years.

With large-scale productions such as "The Amazing Spider-Man" and "The Dark Night Rises" due out later in the summer of 2012 and literary hits such "The Hobbit" and "The Great Gatsby" set to hit screens before the 2012 holiday season, one would expect the strong earnings trend to continue.

The rebound in the industry has been reflected in stock prices and has been noticed by international investors as well. Regal Entertainment (NYSE: RGC), the largest movie chain in the United States, has seen its stock price rise 20% in 2012, far outperforming all benchmarks.

Additionally, The Wanda Group, the largest theater developer in China, announced plans in June to spend $2.6 billion to purchase AMC, the second largest chain in the United States, and an additional $500 million to improve its theater-going experience.

Although all indications point to strong performance continuing through the year, now may not be the time to invest in the movie industry, as assets have already experienced a recent and rapid increase in value. However, theater companies deserve credit for turning things like social media into effective tools for marketing their products and have emerged as a relatively cheap outlet for family entertainment during still-uncertain economic times. This year has proved that moviegoing is alive and well, and any projections to the contrary were premature.

Think movie theater stocks have more upside to price in? Or simply want to keep track of the key players? Here’s a list of stocks that stand to benefit (or have already fully benefited) from the blockbusters of 2012.

As mentioned previously, movie theaters are very dependent on box-office hits, so be warned that a less successful 2012 can mean a bit slump from current valuations.

Data current as of 12:39 p.m. Eastern time on June 22, 2012:

1. Carmike Cinemas Inc. (Nasdaq: CKEC): Operates as a motion picture exhibitors in the United States. Market cap at $240.87 million, stock price at $13.60.

2. Cinemark Holdings Inc. (NYSE: CNK): And its subsidiaries engage in the motion picture exhibition business. Market cap at $2.55 billion, stock price at $22.21.

3. DreamWorks Animation SKG Inc. (Nasdaq: DWA): Engages in the development, production, and exploitation of animated feature films and characters worldwide. Market cap at $1.51 billion, stock price at $17.99.

4. Lions Gate Entertainment Corp. (NYSE: LGF): Engages in the motion picture production and distribution, television programming and syndication, home entertainment, family entertainment, new channel platforms, and digital distribution activities. Market cap at $1.93 billion, stock price at $13.39.

5. Reading International Inc. (Nasdaq: RDI): Engages in the development, ownership, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. Market cap at $129.97 million, stock price at $5.64.

6. Rentrak Corporation (Nasdaq: RENT): Provides content measurement and analytical services to companies in the entertainment industry. Market cap at $202.51 million, stock price at $18.28.

7. Regal Entertainment Group (NYSE: RGC): Operates a theatre circuit in the United States. Market cap at $2.11 billion, stock price at $13.59.

8. RealD Inc. (NYSE: RLD): Licenses stereoscopic three-dimensional or 3D technologies internationally. Market cap at $662.66 million, stock price at $12.13.

9. IMAX Corporation (NYSE: IMAX): Operates as an entertainment technology company worldwide. Market cap at $1.38 billion, stock price at $21.03.

10. Walt Disney Co. (NYSE: DIS): Operates as an entertainment company worldwide. Market cap at $82.81 billion, most recent closing price at $46.34.

Rebecca Lipman is a reporter for Kapitall.com.

This article originally appeared at Kapitall.com:
Theater Stocks are Having a Blockbuster Year