The sour news about the U.S. economy didn't keep movie-goers out of the theater, or prevent "Avatar", James Cameron's Oscar-nominated 3D adventure film, from becoming the highest-grossing film of all-time by surpassing $2 billion in receipts. As a result, "Avatar" has given investors about two billion reasons to pay attention to the movie industry. Here we look at five media stocks that could add movie magic to your portfolio. (For background reading, check out Analyzing Show Biz Stocks.) IN PICTURES: 20 Tools For Building Up Your Portfolio
Lions Gate (NYSE:LGF) is an independent film studio, with top-grossing films that include "Fahrenheit 9/11", Tyler Perry's "Madea Goes to Jail" and the run-for-your-life "Saw" horror movies. Lions Gate is rumored to be eyeing Miramax, whose film library includes "Pulp Fiction" and "Scary Movie". Lions Gate is also a potential bidder for debt-ridden Metro-Goldwyn-Mayer studios (private). MGM has one of the largest catalogs of movies, including the extensive James Bond library of films.
Lions Gate's stock is currently selling below the price of admission to one of its heavyweight feature films. Currently trading around $5, the investment is a long-term play for investors who can wait for the upside swing.
Warner Brothers is a subsidiary of Time Warner (NYSE:TWX). Revered movie titles under the Warner Brothers banner include the "Dark Knight" and "Harry Potter" franchises. Time Warner did report a 3% drop in revenues for 2009 versus the prior year; it attributed part of the loss to a slump in its publishing and filmed entertainment segment. Positive fundamentals for Time Warner include its current stock price of $27, which is $3 shy of its $30 book value. (For more, check out Digging Into Book Value.)
20th Century Fox, a subsidiary of News Corp (Nasdaq:NWSA) is the distributor behind "Avatar". Box office hits from 20th Century Fox also include the four "Star Wars" feature films. News Corp reported a 10% increase in revenues for its second quarter ended December 31, and noted that its filmed entertainment segment received a boost from "Avatar". News Corp's wide array of network and publishing content also makes it an investment possibility.
The web-slinging Spider Man franchise finds its home at Sony/Columbia (NYSE:SNE) pictures. Other big box office draws for the studio have included "Men In Black" and "Hancock". With its current release, "Dear John", Sony is hoping capture the hearts of the romantic set as Valentine's Day approaches. Fundamentals reveal that Sony is also trading near its book value at $33, making it a potential value play for investors.
Liberty Media Corp
Liberty Media (Nasdaq:LINTA) is the parent company to Starz Media. The media portion of the business includes film distributor Overture Films, home of the "Law Abiding Citizen" drama starring Jamie Fox and the upcoming release of "Brooklyn's Finest". Liberty Media is also currently trading below its $11 book value, suggesting upside potential for the future.
Professionally scripted and filmed entertainment is here to stay. The media providers mentioned above are anxious to ensure customer have access to their content on any supported device, anywhere, any time. Investors can use feature film revenues and fundamental research to find the next rising media star for their portfolios.
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