Watch List: Movie/ Entertainment

I’m not all that excited about the “movie” stocks but there may be an opportunity to make some trades within the sector as we head into a festive time of the year. Thanksgiving through Christmas is movie heaven and there’s a chance some of these beaten down stocks could recover.

The one player I do like in the sector is Imax (IMAX, $2.73, down $0.08) and I have mentioned this stock before at much higher levels. I do not trust the stock enough to by any longer-term options but Imax could be a force in the movie industry down the road.

Although we were successful in riding Imax to its 52-week high, the stock has dropped nearly 70% from a peak of $8.28. The stock is cheap enough to the point where instead of making an option trade it might be better off to buy the stock. It eliminates the risk of an option expiring worthless and if Imax can get to $10, you would easily triple your money.

Imax has its fingers in a lot of pies and is developing some solid business partners and relationships with some top-tier names. The company recently inked a deal with Walt Disney (DIS, $21.94, up $0.48) and is strategically building the “Imax Experience” into a tidal wave.

Carmike Cinemas (CKEC, $2.56, down $0.24) and Cinemark Holdings (CNK, $8.22, up $0.35) and Regal Entertainment Group (RGC, $9.52, up $0.68) all stand to benefit as Imax leads the charge into the digital format age.

National CineMedia (NCMI, $8.26, up $0.98) could also do well if movie theaters stay packed and they can jack-up their advertising prices. The company also distributes business meetings and digital programming event services.

Marvel Entertainment (MVL, $29.61, up $1.05) and DreamWorks Animation (DWA, $23.38, up $0.79) are a couple other names worth mentioning.

Again, not much to get too excited about but if the timing is right there is a chance to make 10%-20% in some of these names as we witnessed today.

Rick Rouse
Rick@OptionsMentoring.com

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