You wouldn’t know that theater attendance has been on the decline after what “Avengers: Endgame” has pulled off.
The 22nd film in the Marvel Cinematic Universe has shattered box office records, topping $2 billion globally in its first two weekends.
That’s a lot of money going into Marvel’s parent company, Walt Disney Co. (NYSE: DIS). But we’ve got an even better play for you.
While watching content at home has never been easier or more entertaining, there’s one company that has made the theatre experience worthwhile again.
This company has set the standard for what the movie-watching experience should be.
That’s why it’s not only retaining viewers in the United States - it’s expanding rapidly in overseas markets like China.
Not only has this company played a big role in Endgame’s success, but it will continue to set the standard for blockbuster releases for years to come.
So as the money continues to roll in for “Endgame,” it’s a perfect time to put your money into this backdoor play.
Because no matter how expensive your TV is, it simply can’t compete with this technology…
In Hollywood, These Four Letters Spell “Blockbuster”
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
What does “Avengers: Endgame” have in common with “Avengers: Infinity War,” “Star Wars: The Force Awakens,” “The Dark Knight Rises,” and “Hunger Games: Catching Fire”?
They are all among the highest-grossing films of the last decade. And they were all filmed and screened using technology by IMAX Corp. (NYSE: IMAX).
It wasn’t that long ago that IMAX was known primarily for giant-screen science documentaries you’d watch when you visited museums. But about 20 years ago, the company started adjusting its technology to meet the demands of big-budget Hollywood pictures. Now the “IMAX experience” has become the ace up the film industry’s sleeve to keep filling the theaters in the age of high-definition television and online gaming.
IMAX was founded by three Canadian filmmakers in 1967 who were commissioned by the nation’s film board to create a new kind of motion picture experience. Their first presentation, which was so large it could be viewed from four different floors simultaneously, attracted more than 1.3 million visitors to its pavilion at Expo 67 in Montreal.
That event was so successful, thanks in large part to IMAX’s contribution, that it inspired the name for Montreal’s major league baseball team (now the Washington Nationals).
Today, IMAX is one of the most recognizable brand names in the film industry. With almost 1,300 screens in 77 countries, IMAX is ubiquitous enough that you probably have a screen near you. But it’s limited enough to still command premium prices for the unique experience it provides.
Consider this: IMAX screens represented less than 5% of all the screens that showed “The Dark Knight Rises” in 2012. But they accounted for nearly 12% of the film’s theatrical box office.
If you’re going to take the trouble to go to the theater, you might as well opt for the biggest, best experience possible.
For “Avengers: Endgame,” for example, IMAX’s taller screens display 26% more picture than standard screens, which crop the image to fit. Co-director Anthony Russo said IMAX’s larger format was ideal when shooting a movie with characters of different shapes and sizes, in order to frame them all effectively in action sequences.
Russo’s brother and co-director Joe added, “When you’re working on movies of this scale, IMAX is the best format, because the pure scale of these films can only be captured on the biggest screens.”
In the last few years, IMAX has found a major source of growth in China. Box office returns in that country topped $100 million in the most recent quarter and were up nearly 20% from a year earlier.
The company estimates that it has only penetrated 42% of China’s market capacity. Expanding IMAX theaters often involves joint ventures with relatively low capital expenditure – and hence relatively low risk – on IMAX’s part. So we should expect that double-digit growth to continue in China for years to come.
As big as Endgame is, it’s just the latest in a series of blockbusters for IMAX, each showing on more screens and generating bigger profits than the last.
Now Is the Time to Buy IMAX
IMAX has rebounded strongly from the market downturn late last year. It’s now up over 13% in the last 12 months. But there’s still plenty of room for growth.
With a market cap now around $1.5 billion, the company boosted net income from $2.3 million in 2017 to $22.8 million in 2018.
IMAX is also coming off 13 straight earnings beats. And according to FactSet, earnings per share (EPS) is projected to grow over 60% from 2018 to 2021.
So it’s not surprising that 11 out of 13 analysts tracked by FactSet call IMAX a “Buy” or “Overweight.”
And while "Avengers: Endgame" may represent the end of an era for Marvel, IMAX certainly isn’t slowing down. Coming up, you’ll be able to get the “IMAX Experience” when you go see "Joker," "Star Wars: The Rise of Skywalker," "Frozen 2," "Toy Story 4," and "Spider-Man: Far from Home."
If you want to get a piece of the next billion-dollar release, grab your shares of IMAX now.
And if you're looking for more ways to profit, we've got you covered…
Follow Money Morning on Facebook and Twitter.
About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.