Cineplex Stock: A Deep-Value Stock for the Rest of 2023

Cineplex (TSX:CGX) stock may be getting closer to the end of its multi-year funk.

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Shares of Cineplex (TSX:CGX) have struggled to sustain any sort of relief rally in recent years. For the top Canadian movie theatre chain, the troubles started well before COVID-19. The rise of streaming companies acted as a gut punch to the firm, as it looked to expand beyond just the box office. Though entertainment offerings like Rec Room have been a source of hope for the cinema heavyweight, the firm was forced to take its foot off the gas amid the pandemic.

With a recession moving closer, theatre-goers have yet another reason to enjoy a film from home, rather than going out to catch the latest release. Though Cineplex is very much a discretionary play, going out to the local movie theatre isn’t exactly a bank-breaking night out, especially for consumers who are able to collect Scene+ points.

Cineplex stock: Is the worst over?

The Scotiabank (TSX:BNS) Scene+ card makes it easy for cardholders to redeem movie tickets and other goods. And with subscriptions like CineClub considered, Cineplex may actually be an entertainment option that’s comparable in value to streaming services.

Of course, Cineplex thrives or flops based on “what’s good” that’s showing in cinemas. Through 2020 and 2021, the movie slate had mild ups and big downs, thanks to COVID’s impact. With plenty of new films in recent quarters, I think things are looking a bit brighter for the firm, as it looks to finally form some sort of bottom it can build off of. In the $7-8 per-share range, I think Cineplex stock makes for an intriguing long-term, deep-value play.

The $525.4 million theatre chain faced the perfect storm of headwinds in recent years. While there’s no telling when things will ease, I think many investors are discounting the potential for the firm to get back to its feet again, even as a mild recession strikes in Canada.

Apple helps give a lift to the broader cinema stocks: One billion reasons to return to the cinema stocks

Tech titan Apple (NASDAQ:AAPL) helped the cinema plays gravitate higher last week on news of its plans to spend $1 billion on films to release in movie theatres first. Indeed, the move may suggest that streaming has peaked and that we could be in for a return to the old-fashioned cinemas.

Given the past year of selling in the streamers, I think Apple’s cinema-first titles could help the many ailing theatre firms out there. Whether or not Apple’s the firm that saves the movies remains to be seen. In any case, if Apple’s cinema-first plans bear fruit (sorry for the pun, folks!), we could see the tables begin to turn in favour of Cineplex and its peers once again.

The battle with streamers has been ongoing for years. As more firms opt to launch in cinemas, with plans to release on their platforms later on, the content line-up for the movie theatre giants is bound to be that much better at any given time.

I’m a raging bull on Cineplex after Apple’s big $1 billion deal.

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 Joey Frenette has positions in Apple. The Motley Fool recommends Apple, Bank Of Nova Scotia, and Cineplex. The Motley Fool has a disclosure policy.

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