Jim Cramer recommends a “buy” on the Cinemark theater chain (CNK) based on the success of 3D, which he calls a “3D Typhoon.”
The host of the CNBC stock investor show “Mad Money” notes that Cinemark is the third largest movie theater operator in the U.S. and the largest in Brazil, whose economy is rapidly growing. The worldwide 3D dollar potential is projected to be $20 billion by 2015 with half of all movie tickets for 3D films. He also says that Cinemark is superior to its rivals Regal (RGC) and AMC Entertainment in stadium seating.
Although IMAX (IMAX) is suing CNK for its Extreme Digital XD theatres, Cramer thinks CNK will go ahead with the project successfully.
Cinemark offers a 5% dividend and is trading at a 15.6% multiple compared to its historical level of 20. Although the stock is close to its 52-week high, he would buy, although he cautioned investors to use limit orders and to be patient, since it is a long-term play.