Investing in Blockbuster Stocks

Brittney Barrett |

The summer months have officially arrived and whether audiences are headed to the movies for the blasting AC or the barrage of seasonal blockbusters each year remains up for debate, but one thing is for certain; movie going goes up in the summer. With the annual rise in theater volumes, the company that make the on-screen magic happen get a boost.  Not to say that all studios are created equal because while American movie-going audiences are known for setting the bar low, some films are bound to make more money than others. The studios that manage to corral the largest numbers of these major money makers, including franchises are those primed for a climb through the summer months.

Disney (DIS)

Disney is a media goliath that has extended into a major brand. Between their theme parks and the network ownership of ABC and ESPN, as well as several radio stations, Disney has the benefit of stability via diversification. This summer especially looks good for Disney. The company is expected to see profit growth of 10 percent this year, (despite a first quarter earnings disappointment) and the summer roster may be what takes it there. Already Cars 2, in spite of middling reviews did phenomenally well at the box office, beginning what could be a strong summer. The same can be said for Thor, which is considered to be something of a “tent pole” title or one that spawn more sequels, or to say it plainly, more money in the future. Thor received excellent reviews, and while Cars 2 did not the box office profits should position the company well for the quarter. Shares lost significantly in the aftermath of missing quarterly earnings on May 10, pushing prices down and making them more of a buy. Miller Tabak analyst, David Joyce agrees, slapping Disney with a "buy" rating and short-term price target of $48 on the stock.  So does Mathew Harrington of Wunderlich Securities who also awarded shares a "buy" with a target price of $50. Shares have been trending upwards in recent trading.

IMAX (IMAX)

3D is on the rise and there seems to be more demand than ever for the technology. Shares of the stock have been climbing since 2009, after the release of James’ Cameron’s 3D epic, Avatar, set a new precedent for 3D. Since then, the companies share prices have multiplied by 9 times from $4 to close to $40. Jim Cramer of Mad Money is also on board the Imax train, ranking the stock a buy on Jun 27 after it closed at $30.99 well below its 52-week high of $37.15 but soaring above lows of $12.10. The popularity of movies like Transformers and Harry Potter will help push IMAX higher for the summer. Boosting earnings and helping  them get in line with current perceived demand.

Lionsgate (LGF)

Lionsgate seems to have a knack for identifying media sensations, from being the production team behind AMC's popular Madmen, more scary movie franchises than you can count and the upcoming dystopian trilogy Hunger Games in the works, the company seems on track for major growth. The stock has been relatively unchanging for almost an entire year, but with Mad Men gaining major prestige and Hunger Games coming up that could all change. There have been weakness in Lionsgate movie arena, but a hit with a dedicated fan base a la Twilight could make the studio major money. Four out of eight analysts covering the stock rate it a buy. Even without the new film, Lionsgate it chugging hire. Box office revenue for the company grew by 48 percent to $205.9 million,

 

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Symbol Name Price Change % Volume
AVAV AeroVironment Inc. 28.78 -0.24 -0.83 110,292

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