How to Be an Investment Victor from 'The Hunger Games'
"May the odds be ever in your favor" is the tag line of The Hunger Games, the highly anticipated romantic thriller that opens in theaters over the weekend.
Investors can also stack the odds in their favor by paying attention to the companies that stand to benefit the most from the film's likely success on the silver screen. Let's go over a few of the publicly traded companies that are hoping that theater audiences turn out in droves the way many expect.
Lions Gate Entertainment (LGF)
Shares of the studio behind The Hunger Games have nearly doubled this year -- and nearly tripled over the past two years -- largely on the buzz that's building over the movie and the company's recent acquisition of Summit Entertainment.
When Lions Gate completed the purchase of Summit in January, it inherited the popular Twilight series. Between Twilight and now The Hunger Games, Lions Gate has its hands on two of the most popular trilogies with teens and young adults.
Obviously this is just the beginning.
Once The Hunger Games is a hit -- and it will be -- production for the Catching Fire and Mockingjay sequels will surely get under way. Hype for the movie and synergies behind the Summit acquisition have left analysts moving their profit targets higher. Wall Street now sees Lions Gate earning $1.03 a share in the fiscal year that begins next month. Three months ago the same company watchers were only holding out for net income of $0.47 a share.
Scholastic (SCHL)
The film is based on the first book of Suzanne Collins' best-selling trilogy. It's been huge for publisher Scholastic, which also struck literary gold a few years ago with the Harry Potter series.
Scholastic has put out more than 26 million copies of the book in this country alone. The series has spent more than 180 weeks in a row on The New York Times best-seller list since shortly after its original publication four years ago.
Shares of Scholastic surged 15% last week after the book giant posted better-than-expected results. Revenue soared 22% to $467 million in the quarter, fueled largely by the success of Collins' magnetic trilogy. Yes, Scholastic did post a loss for the period, but Wall Street was bracing for a much wider deficit.
IMAX (IMAX)
After a tough run with John Carter earlier this month, the provider of supersize cinematic experiences should bounce back this weekend.
The Hunger Games: The IMAX Experience opens across 270 IMAX screens domestically and another 18 theaters in the U.K. and France.
IMAX has given exhibitors and movie studios alike reasons to be hopeful in an otherwise dreary industry. Patrons are still willing to pay a premium to see films blown up on IMAX's gargantuan projection systems complete with an enhanced sensory experience.
Mattel (MAT)
Katniss Everdeen -- the lead character in The Hunger Games -- is getting her own Barbie doll. Yes, the hard-fighting Katniss is an unlikely model for the occasionally controversial Mattel doll line, but it will definitely sell as a collectable.
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Some pre-order sites also list Peeta and Gale dolls from the movie.
Yes, pre-orders. Mattel may have blown it by not having the dolls hit stores until next month, but better late than never. The dolls will naturally come with their own character-specific accessories.
Mattel is the world's largest toy company, so these dolls may not exactly move the needle. Mattel also naturally takes in chunkier profit margins on its proprietary toys over licensed properties. However, you know how toy companies are. If the demand is there, the product lines will expand accordingly.
National CineMedia (NCMI)
Theater operators will naturally strike it big. Coming off a 2011 that was the worst year for movie attendance in 16 years, it's easy to see why Regal (RGC), Cinemark (CNK), and Carmike (CKEC) are all looking forward to this weekend's busy box offices.
However, it's not just multiplex owners cashing in. National CineMedia runs the country's largest advertising network for exhibitors. Yes, this is the company that moviegoers hate, the one that forces them to sit through ads and sponsored FirstLook teasers before the movie starts.
Bigger audiences translate into advertisers willing to pay more to reach them.
So, as the big screen exerts its influence on the markets, may the odds be ever in your favor.
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Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. Motley Fool newsletter services have recommended buying shares of Mattel and IMAX.
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