Forget Cineplex and Buy These TSX Stocks Instead

Cineplex Inc. (TSX:CGX) is still in a rut. I’m looking at exciting TSX stocks like WildBrain Ltd. (TSX:WILD) instead.

| More on:
movies, theatre, popcorn

Image source: Getty Images

The entertainment industry has been thrown into flux during the COVID-19 pandemic. Everything, from Broadway acts, touring bands and pop stars, to television and Hollywood productions, has taken a hit during this crisis. However, few have been hit harder than the cinema industry.

Cineplex (TSX:CGX), the top cinema operator in Canada, has been throttled during the pandemic. The company has barely been able to operate over the past year. Today, I want to discuss why I’m still passing on Cineplex and targeting two different TSX stocks instead.

Can Cineplex rebound in 2021?

Cineplex has battled a historical crisis over the past year. However, that does not mean it is time to stick a fork in this company. It has been crafty enough to evade severe financial troubles. Moreover, Canadians will not be able to see instant releases from studios like Warner Bros. on HBO Max.

Canada’s telecoms have managed to stave off this streaming service, as Canadians have their own version in the form of Crave. Crave will not release the Warner Bros. film slate, providing some hope for Cineplex in the months ahead.

Cinemas have gradually started to reopen across Canada in recent weeks. As usual, Ontario has lagged the other provinces. While Cineplex has started its phased reopening, it may not be able to restart operations in major metropolitan areas like Toronto until the middle of spring at the earliest. If Ontario dips in and out of lockdown, as some leaders have hinted at, this could be another lost year for Cineplex. I have my eyes on other TSX stocks.

Why I’m more excited about this streaming TSX stock

WildBrain (TSX:WILD) is a Halifax-based company that develops, produces, and distributes film and television programs worldwide. It is focused on children’s television productions. Some of its top entertainment properties include the Cookie Jar Group, FilmFair, and Peanuts Worldwide. This company has jumped head-first into the streaming space with its WildBrain Spark studio. Shares of this TSX stock have climbed 59% in 2021 as of early afternoon trading on March 5.

The company released its second quarter fiscal 2021 results on February 9. Revenue rose 17% from the prior year to $142 million. It delivered net income of $11.3 million – up from a net loss of $2.3 million in the prior year. WildBrain Spark’s revenue climbed 74% year over year to $15.5 million. The streaming channel increased its audience engagement to 59.7 billion minutes of videos watched – up 15% from Q2 FY2020.

Cineplex has consistently lost ground to streaming services in recent years. WildBrain is a small player compared to giants like Netflix, but it is making exciting inroads.

Another entertainment stock I’d buy over Cineplex

In the spring of 2018, the United States Supreme Court struck down a ban on sports betting. This opened the door for the incredibly lucrative industry in the world’s largest betting market. Canada is set to follow suit. Bill C-218, the Safe and Regulated Sports Betting Act, is now being referred to the last phase of hearings with the Justice Committee following huge support from the House of Commons.

Score Media (TSX:SCR)(NASDAQ:SCR) is in a great position to benefit from this development. Shares of this TSX stock have climbed 74% in 2021 so far. This company owns theScore app, which is battling huge rivals like Draftkings and FanDuel in the betting space. Score is hoping to leverage its loyal users to gain a foothold as Canada looks to move forward with legal sports betting.

Shares of Score have dropped 21% week-over-week as the markets battle volatility. Legal sports betting is just around the corner. Score is a TSX stock that looks poised to pay off. I’m targeting this stock over Cineplex today. Investors should look to add on the dips as turbulence picks up.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Netflix. Tom Gardner owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends CINEPLEX INC.

More on Investing


CNR Stock: Should You Buy Today?

Canadian National Railway has been hit in recent quarters, as economic growth has slowed, with CNR stock declining 10% in…

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Boosting Your Monthly Income: TSX Stocks That Deliver

Dividend investing can boost regular or active incomes, especially select TSX stocks that pay monthly dividends.

Read more »

consider the options
Tech Stocks

Better Buy (2024 Edition): Shopify or Nvidia Stock?

Shopify (TSX:SHOP) isn't the only red-hot tech stock in town that could add to recent gains.

Read more »

Bad apple with good apples

5 Stocks You Can Confidently Invest $500 in Right Now

These stocks could significantly grow your investment over the next decade.

Read more »

Illustration of bull and bear
Tech Stocks

A Bull Market Is Coming: 3 Growth Stocks That Could Thrive

Given their high growth prospects and cheaper valuation, these three growth stocks would be an excellent buy as the market…

Read more »

Golden crown on a red velvet background
Energy Stocks

Enbridge Stock: This Dividend Aristocrat Could Gain in 2024

Enbridge (TSX:ENB) stock is looking like a great buy as management expects it to grow in 2024.

Read more »