cgx – Did I Buy A Falling Knife? 80 Shares
cgx – Did I Buy A Falling Knife?
Don’t you hate that moment when you thought you made a great buy, and then the next day it tanks even lower? At the beginning of August before the 2nd quarter release cineplex stock (cgx) was trading at just under $50 per share. Even know the company increased its revenue 7.7% the stock started tanking. After the stock pulled back another 6% on Tuesday, I made the buy.
Tuesday night when I made the purchase the stock was down 24.32% since the beginning of the month. We bought 80 shares at $37.84 each in our Tax free savings account. At that price the yield is 4.44% which I have never seen cineplex offer. I felt / feel the situation is overblown, clearly movies have sucked this summer. Other than Wonder Women can you name another good one? I went and saw despicable me 3 with my son but really hasn’t been much. Was there even a Jennifer Anniston movie? Some nights we try to watch something on our android box but there is nothing worth watching. (well new movies) Also its the summer, I rather do stuff outside.
Mmmmmm Anniston!
Cineplex knows it relies too heavily on hollywood producing top notch movies and are trying new ideas to branch away from that. Did you know they will be showing the Mayweather – Macgregor Match? Seems pretty cool but personally Id like some beer while watching that fight. If your a gamer they hold tourneys and stuff like that. I got to say that would be pretty neat playing mario kart, super smash bros or something like that on a massive screen. Gaming is going to become a massive industry in the future, maybe this will do well for them.
Rec Room
Cineplex has also started Rec Room’s. Massive Entertainment places (Toronto’s is 40,000 square feet) with a couple places to eat, drink and a huge arcade. Sounds like dave and busters but supercharged. One just opened in the Edmonton Mall, I think these will definitely produce nice profits. Sounds like a gay ol time to me. I know the radio always mentions how its a great spot for dating like their friends went there etc.
The stock has dropped another 6.5% since I bought it Tuesday night. Clearly I didn’t buy the bottom. As I’ve stated before I’m not a professional investor. While it sucks that I timed it wrong, Hollywood is going to bust out again. The next star wars comes out this December and hey who knows maybe they will continue the series and make a Joe Dirt 3. Then you know the stock will soar! Did I get ya Joe? No I’m Cool….. Classic!
Conclusion
While I have a android box, I still like a date night at the movies. If I decide to go to a movie its basically guaranteed I will be going to a cineplex. Maybe I’ll even check out the Rec Room and get me enough tickets for a bouncy ball or something. While I wait for the stock to return on its upward trajectory I’ll sit back and collect its monthly dividend.
Stay Classy
Edit – I sold this stock back in 2018 and I’m glad I did. The current situation with covid is really bad for cineplex. ( cgx ) Not just because of the virus but also because movie producers are delaying their hit movies. Business should be great for rec room when this is all over but I do wonder how business in general for cgx will do moving forward.
I guess time will tell, clearly things will be a lot different moving forward.
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I bought 100 shares a day or so after earnings at around $43.85. STAR WARS in Q4 should help the stock.
It was mentioned somewhere about wants to offer unlimited movie passes for a monthly or annual fee. AMC in the States also had its stock price drop a lot. Similar company to Cineplex.
Hey thats how im feeling too. The force will fix this…. very cool about the monthly fees for movies never knew that. I know a bunch of people who would probably do that. I saw amc was in the same boat. Cheers!
I think the stock will bounce back and that the sell off is over blown. I currently don’t own any shares of Cineplex but I am thinking about making a purchase. Star Wars and the upcoming Marvel movies should definitely help in the upcoming quarters.
Yeah its too much of a pullback for a company that basically has a monopoly in that space. Just hope the dividend keeps up
PCI –
Interesting purchase, and wild price to buy it there. How does the cash flow look like?
-Lanny
Net operating cash flow for this quarter was up, but only 3.5%. With the lack of good movies less people went and attendance was down 2%.
I expected for CGX to decline to low 40’s, but not to mid-30’s. At the current price the stock is undervalued and should be traded higher. It will take a while to digest, but once the dust is settled, investors will scoop up undervalued shares. CGX is now under my radar. If the stock continues to trade that low next month, I will probably buy some shares.
Hey income, yeah i thought so too and then it dropped more. Just wondering what the third quarter results will be
PCI, good luck with this one, I hope it turns around for you & others that bought in.
It’s just that I’ve been around too long, having seen the market up’s & down’s, knowing that investing in stock market even when you believe they’ve hit bottom or seem to be a bargain is a total crap shoot.
Try to always hedge your positions
I’m guessing this could drop even further, maybe hit $25 or lower
Hey john haha yeah im wondering how low it will go. 25 bucks and i will probably add to the position once hollywoood puts out it will bounce. Just hope that dividend stays intact
and when you thought CGX was getting hammered, take a look at AMC
http://finance.yahoo.com/quote/AMC?p=AMC
Yeah both are taking beating. Feel Cineplex is kinda following amc
It’s very difficult to time the bottom of every purchase. The reason that you purchased this stock was because of a pull back. Six to twelve months later, if the stock recovered, it wouldn’t matter much. I don’t have this in my portfolio, maybe it’s time that we take a closer look.
True. Clearly the market is hating it. Saying movie theatres are dead and like drive ins? Haha i still go to drive ins. Bad movies = bad quarter. We all know what buffett says.
Yeah, you almost never have the perfect timing. Sitting back to collect the dividends and let the company and the compound effect do their work is the best thing to do.
In 2015 and 2016, when resource prices dropped (oil, iron ore etc.), I bought Chevron, Rio Tinto, BHP Billiton. All fine businesses but man, their stock prices fell like a stone after I entered into my positions. Chevron from usd 100 below usd 80 and BHP’s price was cut in less than half, Rio not much better. Today, they all have recovered nicely. I’ve never thought of selling but still could kick myself for not having bought many more shares, when prices were so beaten down. Rapidly falling share prices can be kind of scaring resp. paralyzing.
Cheers
Hey shaper. Always nice to hear others past stories. Yeah im trying to add to some positions as they dip ie riocan and boardwalk atm