The Key to Movies Is the Mall

By: Jon "DRJ" Najarian

"Transformers: Revenge of the Fallen" broke box-office records and recorded more than $200 million on its opening weekend. But the trade here isn't its studio, Viacom (VIA.B).

That's because Michael Bay (director and executive producer) has a participation arrangement in the second film, which gives his production shingle 10 percent of the net profits after Viacom recoups its negative cost and P&A. Thus a $700 million take would likely just break even for this very expensive exercise.

But I do like IMAX, which once again did very well, bringing in 7 percent of that weekend take with its technology used on just 2 percent of the screens. Shares of IMAX have doubled since March and may still have some bounce left with "Harry Potter and the Half-Blood Prince."

And then there's Regal Entertainment (RGC) which has 6,801 screens in 522 theaters in 39 states. I like RGC as well, but when you ask yourself where these theaters are, you realize that the true play is teen retailers! With most multiplex movie theaters situated in malls, the kids will be hanging out at Pacific Sunwear (PSUN), American Eagle Outfitters (AEO), and Aeropostale (ARO).

So my money's on those teen and tween retailers getting the most Transformational biz from this summer's blockbusters.

(This article originally appeared in optionMONSTER's Open Order newsletter of July 1. Chart courtesy of tradeMONSTER.)