Your Portfolio Could Catch Fire with These Hunger Games Stocks - Analyst Blog
The second installment of the Hunger Games movie series-
The Hunger Games: Catching Fire
-- is about to begin, and many are already projecting records to be
smashed by its release. In fact,
a recent WSJ article
which compiled box office analyst estimates suggested that the
movie could have the second biggest all-time opening weekend,
and the biggest ever for 2-D only movies.
While this might seem like a lofty prediction, it is important to realize that the buzz for this movie has been building for months-and even more so after great initial reviews-- while it also has a huge following thanks to its book series.
And although Jennifer Lawrence has already cashed in on this trend, as evidenced by her meteoric rise and huge payday for this movie, there are plenty of ways for investors to benefit from this cultural phenomenon too. The easiest way is by looking at some of the key stocks which look to be impacted by the blockbuster, any of which could help to ensure that your portfolio catches fire as well:
Top Picks to Benefit from the Hunger Games: Catching Fire
Lions Gate Entertainment ( LGF )
Lions Gate is the studio behind the Hunger Games series, and this has already proven to be a very profitable decision for the company. Not only was the first movie the highest grossing ever for LGF, but the movie pulled in over $690 million worldwide compared to a production budget of $78 million.
And with many thinking that Catching Fire could hit nearly $200 million in the first weekend, it is easy to see why some are bullish on LGF. Especially when you consider that two more movies in the series are coming down the pike, while a somewhat similar story-Divergent-is also ahead for LGF.
Thanks in large part to this movie, LGF is expected to see solid earnings growth year-over-year for the current quarter, while the most accurate estimate suggests that earnings are moving higher lately as more analysts realize what a blockbuster the next Hunger Games is going to be. And with a solid pipeline of movies, it is hard to get too bearish on this upstart studio which has really made a name for itself as of late.
LGF currently possesses a Zacks Rank #3 (Hold).
IMAX Corporation ( IMAX )
IMAX is best known for its IMAX theaters which have gargantuan screens and impressive resolution despite their size. There are over 750 IMAX theater systems across the globe, and these are often favorites of die-hards seeking an immersive-though a bit pricier-movie experience.
And recent reports suggest that close to one-third of the movie was shot using the special IMAX system, one of the most ever for a major motion picture. So you have to think that those who are really into the Hunger Games will jump at the chance to see the movie 'as it was intended to be viewed' by the directors.
Earnings have also been moving higher for this company as of late, seemingly due to the Hunger Games buzz that has been building. Growth is expected to be fantastic for IMAX too, with year-over-year growth expected to be near 60% for this quarter, and over 120% next, suggesting IMAX is well-positioned to benefit from interest in this movie, and other sequels coming out this winter (such as the next Hobbit movie).
IMAX has a Zacks Rank #3 (Hold) right now.
Regal Entertainment Group ( RGC )
For a safer-and more diversified play-on the Hunger Games success' consider RGC. This stock is the owner of nearly 600 theaters across the U.S. and its various territories, and it obviously looks to do well if there is a record movie that comes out to close November.
And thanks to a solid slate of movies to close out 2013, earning estimates have been rising for RGC as of late. Six estimates have gone higher in the past two months compared to just two lower (for the current quarter), while 10 estimates have gone higher compared to none lower for the current year.
Best of all, RGC has a PE below 17, suggesting it is one of the few values in the market, while its dividend of 4.3% is quite impressive, especially compared to many names on this list. So even if Katniss doesn't put on a good show over the next few weeks, this stock could be well-positioned to benefit from the general solid trend in the movie business.
RGC currently has a Zacks Rank #2 (Buy).
Scholastic ( SCHL )
If movies aren't your preferred type of investment, perhaps a book publisher like Scholastic might be more to your liking. The company is the book publisher for the Hunger Games, so if all the people going out to see the movie decide to read the book, SCHL could benefit.
After all, the company saw a boost in book sales following the last film release, and we could see a similar situation this time around. In fact, for the quarter that included The Hunger Games' release as a movie, SCHL wrote in its press release regarding its results that 'Strong Operating Results Bolstered by Success of The Hunger Games' so if Catching Fire lives up to expectations SCHL could once again profit.
While estimates haven't moved too high leading up to the report, it is important to note that this is SCHL's key quarter, and that the following quarter is generally a very weak time for the company. So hopefully a strong Hunger Games showing helps to boost SCHL once more heading into 2014.
SCHL also has a Zacks Rank #3 (Hold) while it also has a solid industry rank.
Two more companies that might benefit from the Hunger Games phenomenon-albeit less directly-- are Cabela's ( CAB ) and Dick's Sporting Goods ( DKS ) . Both of these firms engage in a wide variety of outdoor and sports activities, and archery is actually looking to get a boost from the movie series.
This is because the story's main heroine is a skilled archer and there are already reports of the sport gaining in popularity across a number of locations around the country. And assuming this trend continues, DKS and CAB could see an unexpected boost in their archery segments from this new focus on the sport.
Both stocks currently have Zacks Ranks of 3 (Hold), while EPS growth is expected to be in the double digits for both firms.
Undoubtedly the next installment of the Hunger Games movie series will be huge. Fortunately, there are a number of ways that investors can benefit from this trend, and in several different ways too.
Any of the aforementioned names could help you to bet on the Hunger Games, so if you think that Catching Fire will be even bigger than the original, consider buying one of the aforementioned companies which are well positioned to benefit from mass interest in the series. Who knows, the profits from some of these stocks might even help you afford to move out of District 12 and into the Capitol!
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