Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Cineplex (TSX:CGX): Is Now the Time to Buy?

Stock MarketsJul 27, 2021 08:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Cineplex (TSX:CGX): Is Now the Time to Buy?

The pandemic is over, as far as Canada’s largest movie theatre chain operator is concerned. Ellis Jacob, president and CEO of Cineplex (TSX:CGX), said on July 16, 2021, “We opened at 10:30 this morning at theatres like Varsity, and just before that, we were closing in on 100,000 tickets sold in Ontario.”

After a nine-month shutdown of operations, the countrywide reopening of Cineplex’s movie circuit is here. While capacity per multiplex is limited to 50% capacity, or up to a maximum of 1,000 guests, Canadians can enjoy watching Hollywood flicks on the big screen again.

Because of the positive news and possible recovery, is it time to take a position in the potential growth stock? Or will meme investors or the army of Reddit traders bring the stock price to the moon, as they did with AMC Entertainment?

Theatre reopening is crucial The reopening in July 2021 includes Cineplex’s out-of-home entertainment venues. It’s in time with the showing of potential blockbusters. Coming from major studios are Black Widow, Space Jam, F9: The Fast Saga, and A Quiet Place 2, among others.

Cineplex’s CEO is also the chairman of the National Association of Theatre Owners. He said, “People are tired of being in their homes and on their couches, their cell phones ringing and their kids running around. These are movies people have been waiting to see on the big screen and with big sound.”

Nuria Bronfman, the executive director of the association, said in June that reopening theatres is crucial. Operators don’t have options like a curbside pickup. They can’t produce revenue when movie houses are closed but have to keep paying fixed costs.

Long time coming In October 2020, the executive committee of the Global Cinema Federation (GCF) wrote a letter to New York Governor Andrew Cuomo urging him to reopen theatres in the state wherever possible. GCF is a worldwide group of major cinema operators representing cinema exhibition’s global interests.

The group claims there are no COVID-19 cases linked to movie theatres anywhere in the world. Cineplex’s Jacob added, “It’s proven to be a safe activity, not only for Canadians but for people around the world.” Besides the capacity limit, there are enhanced safety and cleaning measures as well as protections for returning moviegoers.

Jacob says the movie-going experience is inherently safer than other indoor activities. He said, “You have a reserved seat, and there’s lots of space around you. There are huge, high ceilings with state-of-the-art ventilation.” The Cineplex chief promises the movie experience will be “as effortless as possible.”

An end to cash burn Cineplex, a top-tier Canadian, has suffered enough because of COVID-19 restrictions on movie theatres. Ellis Jacob hopes the massive cash burn ($26.9 million monthly average) will stop soon.

In Q1 2021 (quarter ended March 31, 2021), total revenue and theatre attendance dropped 85.4% and 96.1% versus Q1 2020. The $861.4 million company reported a net loss of $89.7 million. Jacob believes that Cineplex will have the runway it needs to see through the pandemic recovery period by minimizing cash burn.

Meanwhile, at $13.60 per share, the stock is up 46.7% year to date. Derek Lessard, an analyst at Toronto-Dominion Bank, predicts a massive stock rally with the theaters reopening. His 12-month price target for Cineplex is $20 (+47.1%).

The post Cineplex (TSX:CGX): Is Now the Time to Buy? appeared first on The Motley Fool Canada.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC.

This Article Was First Published on The Motley Fool

Cineplex (TSX:CGX): Is Now the Time to Buy?
 

Related Articles

Evergrande Jumps Even as Its Fate Remains Uncertain
Evergrande Jumps Even as Its Fate Remains Uncertain By Investing.com - Sep 27, 2021

By Dhirendra Tripathi Investing.com – Evergrande stock (HK:3333) closed 7.6% higher in Hong Kong trading Monday as the Chinese central bank repeated its determination to keep...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email