Even buy-and-hold investors can't afford to let their portfolios collect cobwebs. Valuations and fundamentals change perpetually, and shareholders need to know what they're holding -- and if there's more potential for growth elsewhere. Here we take a look at some stocks worth swapping.
Disney's (DIS) has had a rough year in theatrical animation. Mars Needs Moms bombed, and Cars 2 was the first Pixar-rendered release that failed to garner nearly unanimous critical praise.
Hoping for a throwback cure, the family entertainment giant is re-releasing The Lion King on Friday. The Disney classic will be playing at your local multiplex for two weeks, but it's not the same tale of a lion cub avenging his father's death that you remember seeing in the 1990s. The Hakuna Matata will be coming straight at you -- since Disney's refashioning the inked blockbuster in 3-D.
This is actually a rare victory these days for fans of donning 3-D specs. Many of the recent cinematic releases in 3-D have fallen short of expectations, and some of the sleeper summer hits including The Help and Bridesmaids just aren't the kind of fare that folks care about watching in either 3-D or in the super-sized IMAX (IMAX) format.
Outside of the final Harry Potter flick, it's been a tough summer for premium cinema, and IMAX and 3-D outfitter RealD (RLD) have felt the pain.
A Tale of Two Multiplex Massacres
Shares of IMAX have surrendered more than half of their June highs. RealD is trading for roughly a third of its earlier high.
It's been a summer to forget for both of these companies, but only one is a "reel" bargain.
It's not RealD. The company may have come on strong with its compelling value proposition for exhibitors seeking to turn some of its screens into 3-D experiences, but it's a one-trick pony. If 3-D is in fact a gimmick -- and that's something that will take more than one difficult summer to prove -- RealD isn't left with a whole lot of options. If studios stop making 3-D films and theater operators go back to showing more conventional 2-D celluloid, RealD is toast.
IMAX isn't as unfortunate. The company has been around for decades. The popularity of 3-D helped further the appeal of premium cinema over the past couple of years, but IMAX will still stand out given its superior projections and sound for discerning moviegoers.
Around the World in 80 Plays
IMAX also has healthy international appeal, with China and Russia growing into the company's two largest markets outside of the United States. Just a few months ago, IMAX CEO Rich Gelfond told me there were 177 IMAX screens either open or scheduled to open in China.
Contagion opened in 257 domestic IMAX screens over the weekend, and dozens of super-sized international locations. It was the top draw at the box office, and you just know that this serious epic isn't going to mess around with 3-D.
Then we get to valuations. RealD faces an uncertain future, yet it's trading at 22 times next year's earnings. IMAX, on the other hand, has a clearer path to sustainability, and it's only trading at 15 times next year's projected profitability.
I'll stick with IMAX.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. Motley Fool newsletter services have recommended buying shares of IMAX and Walt Disney. Try any of our Foolish newsletter services free for 30 days.
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