RealD Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of 3-D movie technologist RealD (NYS: RLD) climbed 10% Monday after Merriman Capital analyst Eric Wold tapped it as a potential takeover candidate.

So what: RealD shares have been beaten up over the past several months, but Wold's call suggests that it's now just too cheap for investors, a larger company, or even its own management (through a go-private transaction) to pass up. In fact, Wold believes the stock is worth $19-$23 per share, representing a whopping premium of between 65% and 100% to yesterday's close.

Now what: I'd continue to be cautious about RealD. Fools know never to buy into a stock based purely on a buyout bet, and RealD's fundamentals remain just too shaky for a long-term commitment. Although Merriman believes that Mr. Market will eventually reward RealD investors with "a more realistic valuation multiple for the shares," top dog IMAX (NYS: IMAX) seems like the smarter way to play a 3-D turnaround.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of IMAX. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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