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Why I’m Buying Cineplex Stock Today

Cineplex (TSX:CGX) is a Toronto-based entertainment and media company that operates in Canada and around the world. It boasts a monopoly in Canada’s movie theatre industry. Shares of Cineplex have plunged 33% year-over-year as of close on January 27. However, the stock has surged 8.1% so far in the New Year.

This Canadian cinema giant has faced major struggles over the past decade. The cinema model already faced the threat of rising home entertainment options before the COVID-19 pandemic. Indeed, the generational health crisis forced Cineplex and its peers to close their doors and eat massive revenue declines. Fortunately, the industry has enjoyed a solid rebound.

There was reason for optimism coming into the New Year as Cineplex and the movie theatre industry at large had some tailwinds to count on. A lot was riding on the performance of Avatar: The Way of Water, the long-awaited sequel to James Cameron’s 2009 Avatar. That film went on to become the highest grossing box office hit of all time. The sequel has managed to rake in US$2.1 billion worldwide at the time of this writing. That is good enough for fourth on the all-time highest grossing films list.

The success of the Avatar sequel holds promise for Cineplex and its peers. This is the first film to reach above the $2 billion mark worldwide since the pandemic.

Shares of Cineplex are trading in favourable value territory compared to its industry peers. Meanwhile, it is on track for solid revenue growth going forward.