Follow the Money Trail With The Avengers
May 4th 2012 2:42PM
Updated May 4th 2012 2:44PM
Summer movie season is upon us and we're looking for the next big film to rake in the big bucks and to see who's getting a slice of what.
For now, our sights are drawn to Marvel's The Avengers, which hits theaters Friday. The action-packed superhero flick is expected to bring in more hype and ticket sales than the 2012 blockbuster surprise The Hunger Games.
For reference, Hollywood Reporter estimates an opening of $150 million or greater. The Hunger Games brought in $152.5 million at opening.
The Avengers has plenty to suggest it will surpass ticket sale estimates in its debut weekend. The superhero film reunion is already sending hard-core comic fans into a swoon just thinking about seeing all their favorites on the same screen. Most importantly, Avengers is the going to be the sequel of all sequels, and nothing warms up theater seats like a sequel. It's attracting fans of Iron Man, The Hulk, Captain America, Thor, Black Widow, and Hawkeye -- all played by America's favorite celebrities.
May the odds be ever in your favor
We all know big movies bring in big money, but depending on the rights holders, the funds can be dispersed in countless directions.
This is demonstrated by The Hunger Games, whose film producer Lions Gate (NYS: LGF) saw shares jump more 80% in the first few months of the year as more investors realized just how big the hype was likely to increase sales. Similarly, Scholastic reported better-than-expected book sales that boosted shares nearly 15%.
Along the same lines, The Avengers is based on the Marvel Comics, which was acquired by Walt Disney (NYS: DIS) in December of 2009. Disney, currently trading around $43.81, is just about at its 52-week high of $44.50, reached only days ago. It started the year at $37.50.
Similarly, the movie is produced by Viacom's Paramount Pictures. Shares are up 7.95% year to date with significant growth in the start of May.
Surely the hype over Avengers can be credited for part of the boost. The question is, does it have more room to grow?
Other plays on The Avengers are IMAX (NYS: IMAX) and RealD, which provide the viewing enhancements that seem to exist purely for films like these. Indeed, it's as if these companies wait around for big films like The Avengers to hit theaters so the audience will feel the charge for a 3-D/IMAX ticket is worth the extra cost.
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Sure, the names mentioned above are strong plays for the Avengers hype, but the year has only just begun. And just think, we haven't even discussed The Hobbit or the Fifty Shades of Grey movie expected for later this year.
With all of this in mind, we have to wonder where movie theater companies fall as a second derivative play. We list some theater stocks below. (Click here to access free, interactive tools to analyze these ideas.)
1. Carmike Cinemas: Operates as a motion picture exhibitors in the United States. The company has a market cap of $184.21 million.
2. Cinemark Holdings (NYS: CNK) : With its subsidiaries, the company engage in the motion picture exhibition business. The company has a market cap of $2.64 billion.
3. Reading International: Engages in the development, ownership, and operation of entertainment and real property assets in the United States, Australia, and New Zealand. The company has a market cap of $120.19 million.
4. Rentrak Corporation: Provides content measurement and analytical services to companies in the entertainment industry. The company has a market cap of $202.36 million.
5. Regal Entertainment Group (NYS: RGC) : Operates a theatre circuit in the United States. The company has a market cap of $2.24 billion.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
At the time this
article was published Kapitall's Rebecca Lipman does not own any of the shares mentioned above. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney and IMAX. The Motley Fool has a disclosure policy.
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