Bet on Bond, James Bond
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Some of you James Bond fans have been waiting four long years for the new Bond film, "Skyfall," while the Bond film franchise was thought to be in freefall after MGM Entertainment Studios took a bankruptcy hiatus. But Bond is back, bigger and better in the 23rd Bond film, scream the promos. All Bond's boytoys are back, the Aston Martin, the cool spy gadgets, and the Bond girls.
More than likely the film, to hit theatres in general release on November 9, will be a big hit once again. There are some stocks that could be interesting plays on the iconic hero's return.
Big Hero, Big Screen
If you can't wait until the 9th, Imax has a special one day early release on the 8th, "Skyfall" in Imax, if you see it a minute after midnight on the 8th fans get a special poster. Also, if you watch it in IMAX you can see the film as it was originally shot, the screen size stuff and its cinematic advantages that Robert Osbourne on TCM is always trying to explain to us cinephiles.
IMAX Corporation ) should get a lot of buzz in the coming weeks. It already reported a good third quarter on October 25, beating expectations on revenue and earnings and expanding margins. The P/E is 44.15 but the stock is down from its 52 week high despite that earnings surprise. Further partnerships with Disney down the road, especially now that Disney purchased the Star Wars franchise, make IMAX look even better.
Already out in foreign release, "Skyfall" in IMAX made $3.5 million in less than 2 weeks with only 79 theaters showing. The new film has significantly outsold the two earlier Daniel Craig turns as Bond and received much better critical reviews, as well. And here's one critic on why you should see it in IMAX.
The Bond franchises have always featured aspirational accoutrements and this one is no exception. Sony Corporation ) which co-produced with MGM (not the casino company) has Bond googling on one of its laptops. Since the film has already debuted at Number 1 overseas, Sony is a double-play on Bond. However, Sony is trading at the low of its 52 week range and despite a 2.70% yield it has a -5.90 P/E. That's half the current share price. The company has been struggling and just reported earnings on November 1 that disappointed on both top and bottom line. The earnings loss of -$0.20 per share was much worse than expectation of a $0.20 per share gain.
While the movie and its likely box office success may move the needle a little for Sony, I doubt that Bond using its laptop will drive their electronics sales. Their five year chart is stunningly bad from a high of $55.00 on January 7, 2008 to its ignominious recent low of $10.91 in August. New CEO Kazuo Hirai has already eliminated 10,000 jobs, sold Sony's chemical business, and plans to wind down new entertainment production and focus on gaming, healthcare devices, and phones. This is definitely not a name I would buy for its yield as it could be suspended with Hirai's ambitious acceleration of a turnaround for Sony. Showbiz can break your heart and your balance sheet.
A controversial play on Bond is Heineken : HINKY.PK). Traditional James Bond diehards have been decrying him sipping a Heineken beer instead of the "shaken not stirred" martini in "Skyfall." Heineken has been growing itself with the acquisition of Asia Pacific Breweries, makers of Tiger Beer. Despite a 35.88 billion market cap, it only trades slightly more than 31,000 shares a day. Headquartered in Amsterdam and founded in 1864, its P/E is 17.34 with a forward P/E of 12.65. The company owns 22 brands of beer, cider, soft drinks and other beverages.
The little Dutch boy is up against some big competitors, however, like Anheuser-Busch ImBev SA/NV (NYSE: BUD) at almost four times its size. But on most metrics, it is competing in line, just with slightly lower margins than BUD and SABMiller at twice Heineken's size. It did have to take on some debt with the Asia Pacific acquisition, but its last Q3 earnings report on October 24 said sales were up in all regions except Europe and that its Dos Equis was gaining favor in the Americas. Also net profit grew to $748 million, just shy of 10%.
While most of Bond's signature accessories are not publicly traded; the suits, the briefcases, the Aston Martin, sadly all are privately held. But of the three plays above, IMAX might have the most upside going forward. Heineken has the lower P/E but that Tiger beer buy and added debt load may affect the next quarter's earnings. As for Sony, I would prefer competitors Apple or Microsoft, and definitely wait to see what the new CEO has up his bespoke sleeve to turn around the company.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Imax and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Imax. 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.