could have a 25% rise ahead.
Summer is an important time of year for filmmakers. In fact,
most producers bring in 40% of total sales between May and Labor
IMAX operates specialized movie theaters, sells projection
systems and rents two-dimensional and 3-D film. It operates 731
theaters in 53 countries. And the stock has been up-trending all
year in anticipation of strong summer box office numbers.
The all-important summer season started with a bang this week as
Iron Man 3
raked in $175 million in ticket sales. The movie built on the box
office success from last year's comic book-based film
Mega-films are a huge investment for studios such as
Time Warner (
. They can cost around $150 million to produce and another $100
million to advertise. Theater operators have much lower annual
costs, making them a better investment as far as movie-related
ChartWatch analyzed IMAX in March as the shares approached the
$26 resistance zone (blue line). Though IMAX hasn't made it to
$32 as quickly
as I expected
, the shares are in a great position to rise to as high as $36
following the recent breakout above $26 resistance.
This chart shows the price of
shares along with an important support line to
IMAX stock won't come cheap. The shares have a P/E ratio of 30
and a forward P/E ratio of 22. However, the company surpassed
analysts' EPS expectations by 44% in the December quarter. So the
current P/E ratios (which are based on the average analyst
estimate) might be too high.
IMAX should have no problem besting EPS estimates again this
quarter given the hot start to summer movie season. And now that
the shares have surpassed the $26 resistance area, they should
encounter little selling pressure until $32, followed by $36 -
with $36 being a much stronger resistance zone. Only another
decline below $26 invalidates the recent breakout and potential
ascent up to $36.
Equities mentioned in this article: TWX, IMAX
Positions held in companies mentioned above: