Has IMAX Corporation (IMAX) Become the Perfect Stock?

2012 was an extremely strong year for the movie industry, with gross U.S. ticket sales reaching a record $10.8 billion. The number of tickets sold increased for the first time in three years, and while paying customer counts were still well below record levels, higher prices made the difference. IMAX Corporation (NYSE:IMAX) scored particularly well on blockbuster hits from the major studios, with The Walt Disney Company (NYSE:DIS)‘s  “Avengers,” Time Warner Inc. (NYSE:TWX) and its “The Dark Knight Rises,” and “The Hunger Games” from Lions Gate Entertainment Corp. (NYSE:LGF) helping to drive customers into premium IMAX theaters.

But what’s really driving IMAX’s potential is that studios are starting to get on board with exclusive IMAX-format content and other differentiators. With Time Warner’s Warner Bros. Pictures signing on to provide 20 films over the next three years for IMAX, the theater’s network will continue to provide unique value to studios and moviegoers alike.

Moreover, IMAX is continuing to push into emerging markets. With dozens of theaters lined up for emerging markets from Russia and China to South Korea and India, IMAX has spread across the globe and will continue to build out its worldwide network in the years to come.

Not everything has gone perfectly for IMAX, as 3-D movies haven’t done as well as some had hoped. Yet by holding back RealD (NYSE:RLD) , the 3-D flop has actually helped IMAX retain its competitive moat, as its experience is more than adequate even in 2-D.

For IMAX to improve, it needs to get net margins up just a bit and then work on getting its earnings to catch up to its pricey valuation. With plenty of growth ahead, IMAX has a clear road to take advantage of Hollywood entertainment well into the future.

The article Has IMAX Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of IMAX and Walt Disney (NYSE:DIS).

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