So You Wannabe a Showbiz Angel
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Maybe you're a movie aficionado, a cinephile, a film freak or you love Broadway and everything about The Great White Way. Then you might have fantasized about being an angel. That's the term for the early investors in a show or film project. Maybe you've had even greater dreams of being an impresario and producer, running a studio and so on. Somewhere in that brainpan of yours are visions of leggy chorus girls showing you and your swanky investor friends the first glimpse of a possible blockbuster. These days it's more than likely you have to have the vision and money of Steve Jobs when he helped fund Pixar. The chances of stepping on the stage of the Kodak Theater and clutching your Oscar after tearfully thanking your blessed mother, well, I hate to burst your bubble are slim to none. But you can still be an angel and make out like a bandit.
The Mouse that Roared
Walt Disney (NYSE: DIS) is the sure thing, in my opinion. This entertainment monolith owns ABC, Disney movies, ESPN, the Disney entertainment parks, Disney cruises and resorts, Disney merchandise licensing, interactive content and I might have missed something but you get the picture. The company also acquired Pixar and Marvel Studios. The stock has been flirting with 5 year highs and has a P/E of 17.38 with a yield of 1.20%. Disney's stock has already exceeded some of May's less optimistic analysts' price targets of $44 with it hitting $48.50 on Friday.
Despite a rare miss with the "John Carter" fiasco, (when will studios realizes nobody cares about Mars anymore?) its latest release of "The Avengers" in May and Pixar's "Brave" in June have been big boxoffice hits and have helped the stock climb higher. "The Avengers" made back its costs the first week. This week's highly anticipated release of Marvel's latest Spider Man feature is expected to do 'boffo' business. Not to mention toy companies Mattel and Jaxxs Pacific are expecting to be sold out of "Brave" themed toys within the month and "The Avengers" merchandise reportedly doing well, also.
Everyone on this planet has heard of Disney and has the brand recognition that other companies would sell their soul for but does that make it a good stock? Things have been looking up lately for Disney with gas prices down the parks are expected to do well this summer and looking ahead multiple sequels of "The Avengers" are already in the books. The next earnings release on August 7 will also be highly anticipated.
What's the bear case? Too far, too fast? Since the stock hit below $17 in 2009 Disney has captured a lot of lost ground. Doomsday sayers were predicting the shutdown of parks and resorts as no one was ever expected to have disposable income to go to Disney World again (except for the Super Bowl winning QB). There are technicians that say maybe wait for a pull back but how much is a place in the world's subconscious worth? Walt would say it was priceless.
The Lion that Squeaks
Lionsgate Entertainment Corp (NYSE: LGF) is another interesting play in the entertainment space. Its market cap is $1.96 billion compared with Disney's $89.69 billion and it has no yield and no P/E as it's operating at a 30 cent per share loss. However, the company that produces and distributes content such as the Mad Men series on AMC, Fearnet, the Tyler Perry franchise, "The Hunger Games" trilogy, "The Expendables" and the last installment of "Twilight," has a firm grip on the magic demographic of 18-24 year olds.
The stock hit a 52 week high of $16.19 in mid-March when Mad Men actor Jon Hamm (sigh) rang the opening bell for more than a double of what activist shareholder Carl Icahn left on the table. After the furor over "The Hunger Games" died down it sold off to $11.50 but has been creeping back nicely before its August 7 earnings release.
Lionsgate has been getting some love from analysts like Caris & Company who have raised the price target to $18 this last week. That leaves a boffo 20% upside. Lionsgate devotees are also anticipating the second in "The Hunger Games" trilogy and the last "Twilight" to make big numbers at the box office as well. It still has a motion picture library of some 13,000 titles available for distribution.
Risky, yes. This is most speculative of these three. Its debt is a continuing concern and it doesn't have the theme parks, resorts and merchandising that Disney has to cushion a miss in its entertainment division and vice versa. Still, this is more of the traditional angel type investment, high risk possible high reward.
Is it Telco or Show Biz
And finally there's Comcast Corp. (NASDAQ: CMCSA), an $86 billion market cap company with Cable Communications, Cable Networks Broadcast Television, Filmed Entertainment and Theme Parks divisions. It notably owns Universal Pictures, NBC and Telemundo. The stock is also flirting with its 52 week high of $31.97 up 3.54% on Friday alone. Its P/E is 19.86 and offers a 2% yield.
The stock has not been acting like a staid telco lately and this may be due to the success of the entertainment division. A cable company will surely cut costs by creating its own content and while Comcast has been late to the angel's party it's beginning to make it worthwhile to investors. Universal Pictures' "Ted" nudged out Disney's "Brave" on its opening weekend. Comcast is up almost 30% since the beginning of this year. It reports August 1.
Telco investors will be aware of the intense competition between Verizon, Dish Network and many other locally based cable providers but Comcast has positioned itself as almost a conglomerate with all its different divisions and also improved its allure as an entertainment stock. If the entertainment divison falters on a single show or movie there is the cable side to divert attention from an inferior performance. It reminds me of those redoubtable Hollywood stars Spencer Tracy, Gary Cooper or even Clint Eastwood; they know their lines, they hit their marks, they make everyone else look better and execute without temperament.
Of these three, Disney is my favorite but Comcast is so close. With gas prices low and some summer blockbusters Disney looks good, if gas goes up Comcast might be a better choice. Lionsgate is more like a true angel stock however, high risk with possible high reward.
So You Still Want to Be an Angel?
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services recommend Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.