Yahoo Finance Cineplex Stock Looks Like a Steal at $8 and Change
Written by Joey Frenette at The Motley Fool Canada
Shares of Cineplex (TSX:CGX) have been oversold and forgotten about for quite a while now. Undoubtedly, the pandemic lockdown days could not have come at a worse time. And though the economy has been open for a few years, CGX stock hasn’t really regained much of the ground it has lost from the crash of 2020.
Indeed, it’s tempting to just throw in the towel on the top Canadian movie chain already. The market cap currently sits at $531.1 million, a fraction of what it once was. With video streamers and big-budget content creators also facing quite a bit of pressure in recent years, questions linger as to how Cineplex has made a return to its former glory.
It will not be easy for Cineplex to turn things around in a sustainable way, given the magnitude of its secular downfall. The company has been trimming away at costs to inch back to profitability. In its most recent quarter, it seems like such efforts are finally starting to take effect, with the firm posting a profit for the first time in quite a while.
While I view such moves as steps in the right direction, there’s still a massive amount of uncertainty surrounding the firm as it looks to compete in an inflationary environment where many households are aching to trim costs across the board.
Undoubtedly, the pain at the grocery store has continued, with higher prices and a relative lack of value. Until the pace of price hikes of such necessities begins to peak and perhaps come down a bit, it may prove tough for Cineplex to get bums in seats at current prices. As Cineplex looks to stage a comeback, it’ll need to continue diversifying well beyond Hollywood. After all, there can’t be a Barbenheimer boom every weekend.
Cineplex: Could its arcade bets turn the tides?
Now that Cineplex has had the opportunity to cut costs strategically, it may have enough financial firepower to continue investing in diversification efforts. Most notably, location-based entertainment, as Cineplex calls it, could be key to sending CGX shares higher again. Playdium and Rec Room have been intriguing entertainment venues that many Canadians have flocked to.
As rates begin to come down (the Bank of Canada’s next move should be a cut), Cineplex may just have what it takes to pick up where it left off with the non-box office business before the pandemic lockdowns sent CGX stock into a historical funk.
Personally, I think Playdium and Rec Room could help CGX stock add to the momentum it put in since the beginning of April 2024. At around $8 and change, expectations are pretty close to the floor, at least in my humble opinion. And as Cineplex looks to give sales a jolt now the box office is encountering a bit of a slump.
The Foolish bottom line
In the age of streaming, Cineplex needs to be able to withstand the occasional drought at the box office. With arcades and other entertainment offerings, I believe Cineplex can improve its ability to roll with the punches as theatrical releases fail to get consumers to drive out to the movie theatre and open up their wallets.
The post Cineplex Stock Looks Like a Steal at $8 and Change appeared first on The Motley Fool Canada.
Should you invest $1,000 in Cineplex right now?
Before you buy stock in Cineplex, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cineplex wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,271.97!*
Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.
See the 10 stocks * Returns as of 5/21/24
More reading
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $25,000
Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Cineplex. The Motley Fool has a disclosure policy.
2024
