IMAX Corporation (NYSE:IMAX) is one of the stocks Jim Cramer weighed in on. Cramer said that the company stock “might be the smartest way” to invest in the movies. He commented:
“Sometimes a stock will come across my screen, and I say to myself, how the heck is this thing doing so well? And that’s how I feel about IMAX Corporation. We constantly hear that nobody goes to the movies anymore, right? Yet the stock of IMAX is up more than 60% over the past 12 months. So what the heck is going on here? A lot of it comes down to how IMAX makes its money. Even if you’ve been to an IMAX theater, it almost certainly wasn’t owned by them. They only own one location. Instead, this company sells or leases its theater systems and then collects more money from ongoing maintenance services…
If you want to invest in the movies, IMAX might be the smartest way to do it, even though the stock trades at just under 25 times this year’s earnings estimates, which is not exactly cheap. The fact is that IMAX is expected to put up 19% earnings growth this year and another 19% next year. Paying 25 times earnings for 19% growth, that’s pretty good. Now, all that said, IMAX reports again on Thursday of next week. And while I’m optimistic about the quarter, expectations have gotten pretty high, wild high, some would say, as the stock rallied over 36% off its April lows.
So if you don’t have a position on IMAX already but want to maybe put on a small position before the quarter, please wait to see how the report goes. Maybe the stock will pull back, and you can buy at a discount. Bottom line: At a time when the movie studios and the movie theaters are struggling, IMAX has tremendous momentum because it’s proven to be the best way to sell tickets. If you’re at all inclined to invest in the movie industry, IMAX seems like your best bet.”
An audience gathered in an IMAX theater, enjoying the cinematic experience.
IMAX (NYSE:IMAX) provides technology and services for immersive entertainment, including film remastering, theater systems, streaming solutions, and live events. The company supports content creators and venues with advanced visual formats, proprietary cameras, and post-production tools.
While we acknowledge the risk and potential of IMAX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IMAX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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