Shares of American movie theater chain AMC Entertainment (NYSE:AMC) continue to rip higher. That gives hope to some investors that other movie stocks could see the same kind of gains.
With the meme stock trade experiencing yet another comeback, AMC stock rose 25% between Aug. 19 and Aug. 25. The Leawood, Kansas-based company’s share price now sits at $4. Last fall, the stock price was at $2.50.
The meme rally continues for AMC, rewarding shareholders who AMC’s fortunes are improving as a series of summer blockbuster films screen at its more than 10,000 theaters worldwide and as Covid-19 restrictions are removed with vaccination rates rising globally.
While many on Wall Street continue to feel that AMC’s share price is too high and due for a correction, many retail investors are searching for the next stock to target for a meme rally. And there appear to be several other movie stocks that could make for good targets given that they have faced the same struggles as AMC during the pandemic of the past 18 months.
Here are three movie stocks to buy that could be the next AMC.
Movie Stocks to Buy: Cineworld (CNNWF)
If you’re wondering what is the world’s second-biggest movie theater chain after AMC, it is London-based Cineworld. Currently, the company operates just over 9,500 movie screens in 10 countries, primarily throughout Europe in Bulgaria, Ireland, Poland, Romania and Slovakia, among other nations.
The only markets Cineworld operates in outside of Europe are Israel and the U.S. Within America, Cineworld runs the Regal Cinemas movie theater chain, which is the most profitable part of the company.
As with AMC, Cineworld has had a rough go of it during the global pandemic when most of its screens were darkened. However, unlike AMC, CINE stock has not experienced a bounce this year as Covid-19 restrictions have eased. In fact, Cineworld’s stock has fallen 32% over the past six months to just 90 cents per share on the over-the-counter market.
The slide has been steep and Cineworld’s share price is now nearly half the value it was in mid-March of this year. With the stock so depressed, it might entice bargain hunters and retail investors to start buying and push the share price higher.
Management at Cineworld has, apparently, become quite jealous of rival AMC’s meme stock status and big gains. It was recently reported that Cineworld’s board of directors is planning a U.S. listing of the company’s stock in hopes that it too will be targeted by the retail investors who have pumped AMC stock up this year. The company currently trades on the London Stock Exchange.
AMC now has a market capitalization of more than $15 billion compared to just over $1 billion for Cineworld.
IMAX Corp. (IMAX)
Another movie theater company whose stock has seen better days is IMAX Corp. The Toronto-based maker of giant movie screens, as well as the cameras and projectors needed to film and show the movies, has seen its share price decline 23% in the past six months.
IMAX stock looks cheap at its current price and is getting cheaper by the day. In the past month, the stock has fallen 9%. As AMC stock becomes more expensive, many market observers are suggesting it might be time to buy more affordable IMAX shares.
IMAX stock has continued to slump despite the company reporting better-than-expected financial results. Second quarter revenue came in at $51 million, well ahead of the $40.6 million that analysts had forecast. IMAX has now reported three consecutive quarters of positive earnings.
Much of the company’s financial strength has come from China, where IMAX movies are still somewhat of a novelty and proving to be popular with audiences. That IMAX is converting many big budget action movies to its format is also helping to drive ticket sales.
Movie Stocks to Buy: Cineplex (CPXGF)
Another Canadian movie theater chain that is on the rebound is Cineplex. The Toronto-based company that has existed since 1912 had a harder time than most during the pandemic.
The company’s revenue plunged as much as 85% in 2020 at the height of the pandemic, and, at one point, Cineplex was forced to sell its corporate head office to pay down debt and stay afloat financially. Receiving relief from many of its creditors also helped keep the company solvent.
This year, things are looking much better for Cineplex. The company’s second-quarter results showed that Cineplex had revenues of $64.9 million, up 195% from $22 million a year ago. Cineplex has also initiated strict cost control measures that have reduced its cash burn to $24 million per quarter compared to $27 million in 2020.
The improved financials have helped lift CGX stock, which has risen 53% year-to-date to $10.50 a share on the over-the-counter market. However, even with the growth, Cineplex stock is still quite affordable and might be ripe as a meme stock target.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
