The middle of July brings excitement to comic book fans, television watchers, and movie viewers through the San Diego Comic Con. The annual event, held from July 18 through July 21, also offers investors opportunities to profit from excitement over new releases and future earnings. Here is a look at three potential winners from the event.
Lions Gate goes big
Perhaps no other company will be as closely followed as Lions Gate Entertainment Corp. (USA) (NYSE:LGF). At the 2013 Comic Con, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) will show off footage from four upcoming movies. Among the highlights will be footage from “The Hunger Games: Catching Fire.” The follow-up to the highly successful “The Hunger Games” movie released in March of 2012 could further propel the stock.
“The Hunger Games” made $408 million in North America and $691 million in total box office revenue. Since the release of the movie, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) shares have increased 108%. Recently, “Catching Fire” was named the most anticipated movie of 2013 and should easily top the box office results of “The Hunger Games.” In fact, with improving international revenue, some experts are forecasting the sequel to top the $1 billion mark in 2013.
As if “Catching Fire” wasn’t enough for Lions Gate Entertainment Corp. (USA) (NYSE:LGF) shareholders and fans to get excited about at Comic Con, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has other exclusives coming. The company will premiere footage from upcoming March 2014 release “Divergent.” Also based on a popular young adult book series, “Divergent” will be able to most likely bring a huge box office total for Lions Gate Entertainment Corp. (USA) (NYSE:LGF). “Ender’s Game” and “I, Frankenstein” will also be showcased at the convention. With “Divergent” and “Ender’s Game,” Lions Gate has successful book franchises that can take the company to new heights.
With all the hype surrounding the upcoming releases along with potential buzz from Comic Con, I have to question analysts’ expectations. For fiscal 2014, revenue is expected to rise only 0.7%. Fiscal 2015 revenue is projected to rise 5.7%. I think both of these numbers are conservative and investors should buy in before they kick themselves. In its fourth quarter earnings report, Lions Gate said they are “creating new franchises as we continue to leverage and exploit our existing brands.” At Comic Con, they are doing just that.
Since being spun-off from Liberty, shares of premium television channel Starz (NASDAQ:STRZA) are up an impressive 37%. With analysts and investors sniffing around for acquisition targets in the original content space, Starz (NASDAQ:STRZA) shares continue to climb. However, a successful Comic Con could make that buyout cost even higher or supplant Starz (NASDAQ:STRZA) as a worthy investment on its own.
At Comic Con, Starz (NASDAQ:STRZA) will debut the pilot episode for its upcoming original television show “Black Sails.” The show about pirates is being produced by Michael Bay, popular director of the “Transformers” movies. Beginning in January of 2014, viewers can tune in to the show that centers around Captain Flint and new crew member John Silver. Reception from the show’s pilot at Comic Con could really give investors and analysts an idea of the potential of the show.
Starz (NASDAQ:STRZA) needs a new hit for its original scripted segment. The channel has had several strong shows, including the recently ended “Spartacus.” New show “Da Vinci’s Demons” has been well received and renewed for a second season. However, with a bigger spotlight as a public independent company, Starz (NASDAQ:STRZA) needs a big boost from “Black Sails.” “The White Queen,” which premieres in August, will also see prominent discussion at Comic Con.
With a small market capitalization of $2.6 billion, Starz has a bigger chance to see a large impact from Comic Con. Starz generates the majority of its revenue from subscription fees generated from cable networks. Starz airs many first run movies on cable and is able to generate strong subscription numbers. The company recently signed a deal with Sony Corporation (ADR) (NYSE:SNE) to air first run movies through 2021, which will hopefully offset the loss of The Walt Disney Company (NYSE:DIS) movies to Netflix, Inc. (NASDAQ:NFLX).
Despite its run-up, shares of Starz are still trading at low valuations of around twelve times expected earnings per share. Analysts are also counting on flat revenue growth over the next two years. With a few successful scripted shows, revenue may see strong increases and shares could really take off, if the company isn’t bought out first.