Cineplex Inc (CGX.TO)

(Top Pick Feb 4/14, Up 18.40%) The movie sleight looks better. They have the rec. room concept and higher priced seats as well as options. As long as they can increase the dollars that patrons are spending they are okay. 70% market share. They have done almost everything right from a management point of view. They also have an interest in a yogurt company.

Hit an all-time high today, basically on American Sniper, which was the best selling movie in January. Also, there is a tremendously exciting slate of movies coming in the next couple of years. They have also taken on a new initiative, basically building entertainment complexes around their theatres, to keep people there longer. It’s a pretty smart group of guys that run this company. Shareholder friendly and have a distribution which is quite good for the investors, and tends to grow over time. He is quite high on this stock.

He sold it because it got a little bit too expensive. It has a decent yield of about 4%. It technically has a monopoly. They have done a very good job. But their business is driven by blockbusters. There are some really big-brand things coming out and that should cause them to full up. It is about driving concessions and other parts of the business that do well.

Very well-managed. They are doing a lot of initiatives in the VIP theatres, a lot of things with their Scene card, loyalty programs. Recently announced the new Wreckroom concept. They are going to succeed.

(Top Pick Jan 22/14, Up 10.53%) It is reasonably priced right now.

A large part of what this company does depends on the box office, and 2014 was not a good year, but 2015 could be. This goes in ebbs and flows. One of the bigger things for this company is the changing dynamic of how people watch things. If it is expensive to go to the movies, maybe you choose a non-demand service or a streaming service like Netflix. They have started offering other things in their theatres. There are better companies out there to own given the changing landscape.

They have built a spectacularly successful business. Even though the box office was down a little last year, they did well because they’ve created theatres with restaurants and you can buy wine/beer. They have turned a $9 ticket into an adventure in dining and entertainment. Dividend yield of 3.35%.

(A Top Pick Feb 5/14. Up 10.1%.) Thinks 2015 will be a much better year. Very consistent, terrific margins, monopoly type business. He still sees this as a growing market and likes the stability of the company.

Big dividend and it moves around with the movie slates. Not a cheap stock. Well managed company. Upside is limited as it is hard for them to grow much more. Hold it for the dividend. You can`t charge much more for popcorn.

Nice yield at 3.5%. 2 words that will define this company going forward is “Star Wars”, which is coming out at the end of next year. That will drive earnings. This has been a weaker year for megahits in the theatre. The company is doing a lot of right things in terms of concessions, VIP screening, opera and live events through some of their theatres.

This is more of a cyclical type, where their movie hits haven't been very good over the past year, and it cycles down. However, the movie and entertainment business is a little fickle. You’ll start to see this come back if things improve. Thinks Netflix and YouTube are factored in already.

Not cheap at 20X earnings. Stock has been relatively flat in the last year, in the range of $38-$44. Struggled last winter with the brutal weather. Also, a so-so movie schedule for the 1st part of the year. This is supposed to be improving in the 4th quarter and into next year with some great sequels coming out. A very, very well-managed company. They continue to increase their concession revenues, their on-screen advertising and their online business. 3.5% dividend yield is well covered.

Short. They have a 77% market share in Canada, so there is not much scope for them to grow by acquisition. This was the worst summer in North American cinemas in 17 years on an inflation adjusted basis. Thinks they are going to have some issues in their Q3 numbers. When attendance goes down 13%, it is going to have a big impact on profitability. There are also longer-term structural issues that they face. Netflix is competing against them. There is going to be Pick & Pay on cable TV. There was a recent announcement that HBO is going to have direct offering, so Netflix is looking to bypass some movies. Yield of 3.6%. Valuation is at 30X earnings and 13.5X EBITDA, which to him is very expensive.

Their problem is that they can’t make gold out of straw, so if Hollywood does not produce any good movies, there is less ticket and concession revenue. There are some good movies coming down the pipe and that should help a lot. Increasingly they are selling an upscale product with VIP seats. Right now the stock is cheap.

Stock has been hampered a little bit by not having a lot of great content this summer that they normally would. There’s really not a lot coming up into the holiday season. However, going into next summer there is quite a bit of star movies coming out. Likes the name. Decent yield at 3.7%. Extremely strong management.