Cineplex Inc (CGX.TO)

They are changing the whole concept of watching movies. They are putting in lounges and the food is better. If a little tight on money, and you want to take the family out, you can go here, perhaps have a beer, and see a good movie in a nice comfortable situation. It makes a very reasonable evening out, particularly for a family. They are improving the ambience significantly. Have had a run of crappy movies, which is part of the problem. He is watching this.

It has come down dramatically, as it is the worst in 20 years for a movie slate. He bought aggressively. They have a 72% market share in Canada and are diversifying. Hollywood has to stop serving dog food and bring back caviar. 2018 should be a better year for movies.

They’ve done an amazing job and surprised him over the years by creating excitement with all the new blockbuster films. However, the long-term trend is not your friend for this company, because people are buying Netflix and watching more and more stuff at home and on their computer. It’s hard to see that trend changing. Management has done a very good job over the years, it is really just a tough industry.

Has been massively oversold, and it is very, very likely that the stock is going to have a short-term rebound. This is a short-term trade for those people that like that sort of thing. (Analysts’ price target is $50.)

This is in command of its space. It has the glorious health food, popcorn, and charging high prices for it. They have started up a new thing called the Rec Room.

Sold a Covered Call that is expiring this month at $42. It is currently at $38. Would you resell the covered call at a later time but at a lower price? With covered calls, the one thing to be careful of is, what is the open interest on the call, i.e., how many people are playing this game. That is going to affect what the spread is between the Bid and Ask. This stock has dropped about 20% in the last month, and he thinks you could safely do it here.

The market darling for quite a long time. It did very well from about 2011 through to earlier this year. In the course of thriving and prospering, the stock got very richly priced. Trading at about 30X earnings. When you have a company trading at that multiple, and not really growing their earnings at a commensurate rate, it is very vulnerable to any short-term swing in sentiment. Hollywood has not come out with a good slate of movies this summer, which has really impacted them. He would be wary of the stock until things started to improve.

They have not had bad results, but this quarter will be bad. The box office net is down about 20% quarter to date. Unless September picks up materially, they are going to have a very lousy quarter. However, Q4 looks amazing and it could be up 20%. Also, 2018 looks really good. If you judge this quarter by quarter, then you are analysing the stock wrong. They are light years ahead of their competition by diversifying into other entertainments. Within 4 years, they are looking to have 25% of their revenues in EBITDA as non-box office. This is a great deal here.

Last time he said he would be interested at $38 and it is now at $35. If you are patient and just collect the yield it will grow again. This week was the lowest attendance since September of 2001. He would not be in any rush until the fall and you see better movies coming out. He would like to see it building a base.

Bought at $40 and Sold a $42 Sept 2017 covered call. Should I sell lower? He would probably go out to December.

It tends to do either well or badly during the summer and during Christmas time. It has to do with the quality of shows that are on at that time. The movies are not drawing crowds this year. Do not go in because we have not reached support. Wait until Christmas if you want to get in.

They had a poor summer for movies. If you have a long enough view, then the management team is excellent and you could hold onto it. He is not in this sector right now.

The dividend is still supported. He thinks at some point we will see some support in the name. They are diversifying away from just the box office. The third quarter might be a little weak. Put stop losses where you are comfortable.

They missed on their earnings. They have weak summer bookings, more competition with premium video on demand and a new startup in the US that offers $10 US for all you can consume movies. The challenge is that it is still not that cheap even after the selloff. They have no debt problem. It is still not cheap enough to get in front of.

It pays a reasonable dividend that is safe. They are down about 20% year to date. Second quarter earnings were a disappointment. If there are not a lot of good movies coming through they suffer. Longer term they are trying make themselves less volatile than they are. Right now it is not good value. It is not cheap. Early numbers on the Rec Room business are pretty good.