Good movie season for stocks?

The bright lights of Hollywood may be shining the way to promising returns for the movie industry, according to Standard & Poor's Equity Research Services. Indeed, the industry might be just warming up, with the release of more potential blockbuster films scheduled over the coming weeks and this year's 3.1 billion gross receipts through mid-May 2007 at the U.S. box office likely on a pace to eclipse last year's total domestic gross receipts of 9.2 billion. In the view of S&P, several of the industry's biggest names could have banner years.

Among those companies on which S&P has a "Strong Buy" 5-STARS out of 5 recommendation, and which it believes could benefit from strong performance at the box office are: General Electric Co. NYSE: GE, 37 and The Walt Disney Co. NYSE: DIS, 36.

Also, S&P believes that DreamWorks Animation DWA: 3-STARS "Hold," 28, News Corp. NWS: Hold; 23; NWS.A: Hold, 22, Sony Corporation SNE: Hold, 55, Time Warner TWX: Hold, 22 and Viacom VIA.B: Hold, 43 could also see positive impacts from success at movie turnstiles.

According to S&P, a multitude of offerings should be able to continue the pace set by the release of Sony's 'Spider-Man 3'. These include several three-quels, such as DreamWorks' 'Shrek the Third', Disney's 'Pirates of the Caribbean: At World's End', Time Warner's 'Ocean's 13' and 'Rush Hour 3', and News Corp.'s 'Live Free or Die Hard'.

The above releases may find stiff competition for ticket sales from GE's NBC Universal unit's sequels 'The Bourne Ultimatum' and 'Evan Almighty', News Corp.'s 'Fantastic Four: Rise of the Silver Surfer', as well as Time Warner's fifth Harry Potter instalment, 'Harry Potter and the Order of the Phoenix', Disney's newest animated feature, 'Ratatouille' and Viacom's 'Transformers'.

Tuna N. Amobi, Senior Media and Entertainment analyst with S&P says: "We believe there's a lot to like about the list of upcoming releases. You have some films that offer what we see as proven 'brand-name franchises' and a successful box-office track record, as well as appeal across multiple audience segments.

"When you factor in the 'star power' of the films' casts, live or voiceover, we believe there is a strong case to be made for the industry building on its early box-office success, which could lead to nice returns and ultimately stock performance."

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2007-05-24 13:57:48 © Moneyextra.com