The Best Movie Stock for the 3D Craze (IMAX, DLB, DIS, NWS, LGF, DWA)

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One of my favorite small cap stocks to buy right now is IMAX Corporation (NASDAQ: IMAX). There’s a lot of hopes in the film industry and on Wall Street that this is the summer 3D films will at last come into their own. That means this could be the breakout period for IMAX stock as the company goes from small cap stock to a big time entertainment star. The success of 3D films could also consequently help media stocks Dolby Laboratories Inc. (NYSE: DLB) which does movie sound systems, and studios like The Walt Disney Company (NYSE: DIS), News Corporation (NASDAQ: NWS), Lions Gate Entertainment Corp. (NYSE: LGF) and DreamWorks Animation SKG, Inc. (N ASDAQ: DWA) among others.

But IMAX is far and away my favorite movie stock right now to benefit from the 3D boom. Here are the details: Imax corporation is a relatively small company with a market cap of less than $1 billion, but its technology is so innovative that this stock is a household name. This stock makes and leases projection and sound systems for over 350 giant-screen IMAX theaters in more than 40 countries. The theaters are owned by commercial operators or nonprofits like museums and science centers, but owners must pay maintenance and royalty fees to IMAX for this truly amazing movie technology. The company’s formats include IMAX Dome where screens reach heights of up to 80 feet, and IMAX 3D where images literally come right off the screen and into the audience. This is truly the next step in movie technology.

Recently, IMAX saw phenomenal success thanks to the 3-D sci-fi movie Avatar that has smashed all previous movie records. The company is up over 30% so far in 2010 with a lot of potential still left. The tally for Avatar is currently $2 billion and counting, with the DVD still selling like hotcakes now that the movie has moved out of theaters! That makes me incredibly confident that the millions who have gone to an IMAX theater to see the stunning Avatar flick will return to see Iron Man 2 and other summer blockbusters in the same format. This means IMAX will continue to deliver big profits well into the summer.

That gives IMAX stock a good longer-term outlook on top of what was a spectacular quarterly earnings report thanks to Avatar. IMAX stock posted a record earnings report at the end of April that included profit of $26.6 million or 42 cents a share in the first quarter, compared with a loss of $2.6 million or 6 cents a year earlier.

That’s success you can take to the bank. I recommend IMAX for any investor looking to cash in on the 3D movie craze this summer.

As of this writing, Louis Navellier owned IMAX in his Emerging Growth newsletter.

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