The Hunger Games hits theaters Friday morning at 12:01 am in sold out theaters around the United States. In my last article about Lions Gate Films (LGF), I discussed how the three Hunger Game books and the three or four movies it will spawn have the potential to transform the company. As the movie approaches theaters, it's time to take a look at other potential beneficiaries from The Hunger Games.
In March, Hunger Games author Suzanne Collins became the bestselling author on the company's Kindle platform. The three books in the series, The Hunger Games, Catching Fire, and Mockingjay continue to top the bestsellers list on Amazon. A quick look at the Amazon Top 100 Books shows:
1. The Hunger Games
2. The Hunger Games Trilogy Boxed Set
3. Catching Fire
14. The Hunger Games
22. The Hunger Games - Movie Tie-in Edition
45. Catching Fire
62. The Hunger Games Trilogy
Now some of the duplicates are because of paperback vs. hardcover editions but the fact of the matter is the book is selling. The book series has received prominent positioning on Amazon's front page several times. Today, when looking at a search for The Hunger Games, I was surprised to see that all three books are available for a free download for Amazon Prime members. Amazon Prime is the premium yearly membership that provides free shipping and instant movie viewing to customers and now includes three bestsellers for free.
Share Price: $191.73
How to Trade: Amazon is trading almost half way between its 52 week high and low prices. I think shares represent a good buying opportunity as the company continues to enter new markets like home furnishings and sporting goods. Buy.
Barnes & Noble (NYSE:BKS)
Barnes & Noble is the largest bookstore in the United States, so you would think that the bestselling book would have a big impact on shares. The fact is every year has a bestseller and it doesn't really matter if the book is made into the movie. Barnes & Noble has fallen behind Amazon for the lead in sales of books. Its Nook e-reader also plays second fiddle to the Kindle made by Amazon.
Share Price: $14.20
How to Trade: As discussed, Barnes and Noble has been losing to Amazon for years and doesn't appear to be overtaking its lead back anytime soon. I would stay away from shares. Sell.
The Hunger Games appears in several places on the company's homepage and its clear to see that they are encouraging fans to pre-buy tickets for the highly anticipated movie. The clear winners from The Hunger Games could be the movie theaters that charge $8-$10 for a movie ticket to see the book presented on the big screen. Cinemark operates in 39 states in the United States and has 3,878 screens in the country. The company, which is number three by screen count in the United States, has a strong presence in Latin America. One hundred and fifty nine theaters, showing movies on 1,274 screens, operate in Latin America. The company should be more than happy to accommodate all the fans of the book into its theaters to kick off an early blockbuster before summer.
Share Price: $22.11
How to Trade: Cinemark hit a 52 week high Wednesday and is trading higher now on The Hunger Games. I think there is still an opportunity for some more gains as 2012 is a huge year for movies. Big blockbusters like The Hunger Games, The Dark Knight Rises, The Hobbit, and The Amazing Spider-Man will hit theaters this year. Buy.
Hot Topic (NASDAQ:HOTT)
Unlike most of the companies on this list, Hot Topic operates with a market capitalization of under a billion dollars. With a market value of $500 million, Hot Topic could profit nicely from movie tied-in merchandise. A search for "Hunger Games" reveals 52 items related to The Hunger Games movie. Hot Topic has done well with movie merchandise and is a popular destination for teenagers to shop at. I think Hot Topic could increase earnings for this quarter based on the movie and merchandise related to it.
Share Price: $10.14
How to Trade: Shares of Hot Topic, which also pay a 3% dividend, are close to a 52 week high. The Hunger Games could have a dramatic impact on earnings for the current quarter, which analyst are expecting to be $0.05. Buy
Imax Corporation (NYSE:IMAX)
On February 2nd, it was announced that The Hunger Games would be opening for a limited one week engagement on Imax screens. As an Imax shareholder, it is kind of a shame that the company had a prior commitment to Wrath of the Titans, the sequel to Clash of the Titans. On March 30th, Wrath of the Titans will take over Imax screens. I'm sure that seeing Perseus travel to the Underworld to save his father Zeus will look great with special effects on the big screen, but I can't help but wonder how much money The Hunger Games could have made on Imax screens with a longer run. The limited run does help to ensure that most shows will be sold out as demand for this movie is growing each week. I discussed Imax adding both The Hunger Games and The Avengers in larger lengths in this article.
Share Price: $26.30
How to Trade: Imax is firing on all cylinders with a huge 2012 lineup of movies. The company is also signing multiple international theater expansion deals including a recent one for its first theater in Pakistan. Imax was one of my top ten stocks for 2012 and is a stock I own in real life and I think it will have a successful year and is headed to a new 52 week high soon. Buy.
Netflix has had some troubles this past year with rising streaming costs. The company appears to have made a smart acquisition of content when its U.K. streaming division made a deal with Lions Gate to stream movies within a year of their theatrical release. The Hunger Games will be streamed to Netflix U.K. customers after the movie is out of theaters. Netflix is in 43 countries now and competes with Amazon Lovefilm unit in the country. This deal and the success of the movie could help Netflix overseas.
Share Price: $120.10
How to Trade: Netflix shares trade with wild swings in price and I don't think The Hunger Games can save the company from its streaming costs. The company's plan on having original shows seems to be working as it now is up to five shows. As television channels dump shows and they decide to shop themselves, Netflix could be a big winner. Hold.
Regal Entertainment (NYSE:RGC)
Regal is the largest movie theater company in the United States with 6,598 screens. The company has a large presence in many big population cities and has an average of 12 screens per theater, which ranks it higher than most of its peers.
Share Price: $14.07
How to Trade: Regal trades close to its 52 week high, likely from the success of The Hunger Games built in. The company also pays a 6% dividend, which is higher than the 3.8% offered from Cinemark. Just like Cinemark, Regal is in for a great 2012 lineup and should have great earnings to report. Buy.
Scholastic hit a nine year high in its share price last week. The gain was due in large part to The Hunger Games. The trilogy of books is published by Scholastic and has been released in 26 different languages. The series of books has been released in 38 countries. The books are popular with females and males of a wide range of ages, which bodes well for the company. The company also publishes the Harry Potter series, which has strongly declined in sales.
Share Price: $37.35
How to Trade: Shares of Scholastic are up 25% since the beginning of the year. I think Scholastic shares have become fairly priced and will likely only see a slight bump in price. Hold.
The Hunger Games is set to make between $70-$100 million this opening week and estimates place it in the $250-$350 million range for domestic box office. At least two more movies and possibly three are being made to close out the book series. Any of these companies could also be impacted next year when the sequel Catching Fire is released.
Disclosure: I am long LGF, IMAX.