Written by Rebecca Lipman

My exposure to "Fifty Shades Of Grey," the No. 1 selling fiction book in America, started with the following:

1) My cousin's bridal shower: "Fifty Shades Of Grey" was the overriding topic of the night. The ladies were gushing about the books, telling the not-yet-inducted readers that they had to read it ASAP. Followed by several enthusiastic responses that yes, they will, it sounds great!
2) My CFA study partner, a female, asking me if I had read it. "No" "You need to, it's amazing - I got no studying or sleeping in this week because I couldn't put it down."
3) Gawker ran a story on it.


There have been many more "encounters" since, so I did some digging. Here's what I learned and why you should care - if not for the novel, but for the potential market implications.

What the Heck Is "Fifty Shades Of Grey?"
Having not (yet?) read the novels I can only infer this:

The trilogy is like some erotic, soft-core fantasy that follows a sexually naive literature student who quickly finds herself in the know.

The three novels, "Fifty Shades Of Grey," "Fifty Shades Darker" and "Fifty Shades Freed," are currently the No. 1, 2 and 3 selling fiction book in America.

Trading the Trend
Don't underestimate the power of a female-driven phenomenon. This book is going viral and women - from teens to grandmas - will spend a lot of money on their interests. But where is that money going?

First published by The Writers' Coffee Shop Publishing House, the trilogy was picked up by Vintage Books, a division of Random House Inc. Unfortunately, none of these are publicly traded companies. But good news! There's a movie too...

Warner Bros., Sony, Paramount and Universal Pictures entered bids for the film rights to the trilogy. Universal and Focus Features won the bid. This isn't much of a pure play either: Universal Pictures is a subsidiary of NBCUniversal, a joint venture of Comcast (Nasdaq:CMCSA) and General Electric (NYSE:GE). Focus Features is a subsidiary of Universal Studios.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below.



Business Section: Investing Ideas
"Fifty Shades Of Grey" may not be your kind of bed-time novel or date night movie, but it may be your kind of investment. Although the plays on the film are diluted, they might still be there:


Universal's movie rights were secured Mar. 26, 2012. On that day Comcast, which has a 51% interest in Universal, saw shares close at $30.35, one cent short of its 52 week high (it has since dropped and rebounded - it currently trades around the same high level). The next day shares traded at a high of $30.41 before closing down at $30.17. Was this due to "Fifty Shades Of Grey?"

And, of course, this will be no ordinary chick flick. Women across the country will be going out with all their friends to watch this film. Dare I say a midnight showing is in order? Movie theater stocks, listed below, might be in store to benefit from better-than-expected ticket sales.

What do you think - can the market benefit from a viral smut story? (Click here to access free, interactive tools to analyze these ideas.)

1. Carmike Cinemas Inc. (Nasdaq:CKEC): Operates as a motion picture exhibitor in the United States. It has a market cap of $171.69M. This is a risky stock that is significantly more volatile than the overall market (beta = 2.74). The stock has gained 83.61% over the last year.

2. Cinemark Holdings Inc. (NYSE:CNK): Cinemark Holdings, Inc. and its subsidiaries engage in the motion picture exhibition business. It has a market cap of $2.64B, offers a good dividend and appears to have good liquidity to back it up - dividend yield is at 3.66%, current ratio is at 2.06 and a quick ratio at 2.02. The stock is a short squeeze candidate, with a short float at 6.81% (equivalent to 6.07 days of average volume). The stock has gained 18.72% over the last year.

3. Reading International Inc. (Nasdaq:RDI): Engages in the development, ownership and operation of entertainment and real property assets in the United States, Australia and New Zealand. It has a market cap of $113.14M. Relatively low correlation to the market (beta = 0.71), which may be appealing to risk averse investors. The stock has had a good month, gaining 11.96%.

4. Rentrak Corporation (Nasdaq:RENT): Provides content measurement and analytical services to companies in the entertainment industry. It has a market cap of $209.07M. After a solid performance over the last year, RENT has pulled back during recent sessions. The stock is -3.45% below its SMA20 and -7.77% below its SMA50, but remains 17.09% above its SMA200. The stock has performed poorly over the last month, losing 16.43%.

5. REGAL ENTERTAINMENT GROUP (NYSE:RGC): Operates a theatre circuit in the United States. It has a market cap of $2.11B. The stock is a short squeeze candidate, with a short float at 18.19% (equivalent to 11.46 days of average volume). The stock has had a couple of great days, gaining 5.5% over the last week.

6. RealD Inc. (NYSE:RLD): RealD Inc. licenses stereoscopic three-dimensional or 3D technologies internationally. It has a market cap of $659.57M. The stock is a short squeeze candidate, with a short float at 13.64% (equivalent to 11.97 days of average volume). The stock has lost 59.72% over the last year.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.

Related Articles
  1. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  2. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  3. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  4. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  5. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  6. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  7. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  8. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  9. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  10. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center