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‘Dune’ at Home Turns Theaters Into Wasteland

(Bloomberg Opinion) -- Warner Bros. and HBO Max, two units of AT&T Inc., just delivered a crushing blow to movie theaters. All of the studio’s films set for release next year — including “The Suicide Squad,” “Dune” and “The Matrix 4” — will go straight to the HBO Max streaming service at the same time that they play in cinemas. While Warner executive Ann Sarnoff sees it as a “unique one-year plan,” let’s be honest, it’s not. Even as Covid-19 vaccines near approval, it could be a while before consumers feel safe returning to the close confines of a shut-in movie theater. In the latest Morning Consult poll of 2,200 U.S. adults conducted in the final days of November, 51% said it would be four to six months or even longer before they’d feel comfortable resuming trips to the movies; another 26% said they didn’t know or didn’t have an opinion on it. By the time most people do feel safe going, many still may not want to. What I wrote in October — as exhibitor AMC Entertainment Inc. warned of possible bankruptcy — bears repeating:We have learned to live without movie theaters. Even the ones that make it through the crisis may find that online-streaming apps have stolen away audiences for good.Unlike amusement-park rides and cruises, which have been equally paralyzed by the pandemic, the movie experience can be replicated at home — and sometimes more cheaply and conveniently. It will be that much harder for theater chains to bounce back. The place cinemas have in our culture and history, and the thousands of jobs they provide, makes it all the more tragic. But consumers keep signaling that going to the movies is more of an occasional treat when there’s a must-see blockbuster film than a regular habit. That’s not enough to support 40,449 movie screens in the U.S., the latest total published by the National Association of Theater Owners. As I noted in October, higher ticket prices have helped give the false sense that box-office sales are climbing, when in fact adjusting for inflation shows that they’ve gradually fallen over the last 20 years:Companies such as AT&T and Walt Disney Co. are responding as they must by going where audiences are. And that’s at home. The box office is a crucial source of profit for the Hollywood giants, but prioritizing that over streaming will only hurt them in the long run as Netflix Inc. rounds the corner on 200 million subscribers. The first domino fell in July, when Comcast Corp.’s Universal Studios struck an agreement with AMC to cut short the time its films play exclusively at theaters. Then Disney, the single most important company to movie-theater businesses, bypassed them and put “Mulan” directly on Disney+ in September for a viewing fee of $30. Last week, I wrote that Disney+ would be smart to offer a “box-office pass” subscription tier for movie fans willing to pay up for continuing virtual access to new theatrical releases. HBO Max, which costs $15 a month, won't charge anything extra for its films, for now at least.Shares of AT&T popped slightly on its announcement Thursday,...

TipRanks

3 Penny Stocks Under $5 With Massive Upside Ahead

Investors know that the key to profits is in the return – and that means, a willingness to shoulder risk. Risk is relative, of course, and tends to run hand-in-hand with the return potential. Find a stock with a giant return potential, and chances are, you’ve also found one with a higher risk profile. The highest returns usually come along with the lowest share prices. After all, when a stock is priced for just pennies, even a small gain in share price translates into a huge return. Which means that penny stocks – these days, usually seen as those equities priced under $5 – combine a perfect storm of market attractions: low share price, high return potential, and higher than usual risk. Using the TipRanks database, we’ve pulled up details on three compelling stocks that fit this profile of low share price and huge upside potential, 100% or more, according to Wall Street analysts. Cinedigm Corporation (CIDM)We’ll start with Cinedigm, the LA-based entertainment company specializing in content marketing and distribution along with digital cinema. Cinedigm is an independent studio for film, TV, and digital production. The company distributes digital media across a variety of content networks.Back in June, CIDM shares showed a sharp spike when the company announced its partnership with Vewd, the world’s largest OTT software provider for Smart TVs, a growing segment of the digital viewing world. Customers are shifting away from cable TV and more and more toward streaming. A working relationship with a Smart TV software company would give Cinedigm access to Vewd’s installed customer base – more than 300 million Smart TV sets. Revenues in 2020 have been fairly stable. For Q1, Q2, and Q3, the top line came in at $7.74 million, $6.02 million, and $7.18 million. The Q3 number holds the middle spot in that range. Earnings, however, missed expectations. At a 23-cent per share loss, the EPS came in 17-cents below expectations. On a positive note, CIDM reported a year-over-year sales increase in its core business of ad-based video on demand of 27%.Covering the stock for Benchmark, 5-star analyst Daniel Kurnos points out a few reasons why he thinks Cinedigm “is becoming a much more intriguing investment proposition, particularly at these levels: 1) Organic growth is still building, with the legacy channel lineup strategy on pace to achieve the 30 channel milestone 12 months ahead of schedule; 2) A new highly accretive, streaming roll-up strategy is emerging that Cinedigm is in the best position to execute with minimal competition; 3) No credence or value is being given any more to Cinedigm’s digital projector inventory or Starrise stake, both of which should ultimately benefit in a post-COVID world.”In line with his bullish stance, Kurnos rates CIDM a Buy, and his $3.50 price target implies room for a stunning 573% upside potential in the next 12 months. (To watch Kurnos’s track record, click here)Currently, CIDM has 2 reviews on record, making the stock a Moderate Buy. The shares are selling for 53 cents, and the $2.75 average price target suggests an impressive 418% upside on the one-year time horizon. (See CIDM stock analysis on TipRanks)Kubient (KBNT)Content distribution relies heavily on marketing and monetization for its profits, and that’s where Kubient comes in. This cloud software company offers an ad platform that connects publishers and marketing directly with their audiences. The company works with audience automation to collect data, connect brands, and create a transparent ad environment across digital channels.Kubient is a new company in the stock market, having held its IPO just this past August. The initial offering brought in $12.5 million gross, selling 2.5 million shares at $5 each. During those first few months of public trading, which included the end of the calendar third quarter, Kubient reported some solid Q3 revenue results. The top line rose from $92,000 in Q3 to $280,000. The year-over-year gain was even more impressive, reaching 400%.Maxim analyst Jack Vander Aarde believes that Kubient holds a strong position to bring real changes to its industry. The 5-star analyst writes of the company’s potential, “KBNT’s core offering, Audience Cloud, seeks to disrupt the $325B+ digital advertising market and address the industry’s current pain points. In 2019, advertisers lost ~$42B to ad fraud, which is forecast to grow into a $100B problem by 2023, but Kubient has a potential game-changing solution called KAI […] We project 2021 revenue of $6.6M, up 211% y/y, and 2022 revenue of $17.4M, up 164% y/y. The business is highly scalable and should unlock significant operating leverage as revenue grows.”To this end, Vander Aarde rates KBNT a Buy along with a $10 price target. This figure suggests 154% upside growth from the current share price of $4. (To watch Vander Aarde’s track record, click here)Orion Group Holdings (ORN)The construction industry brings to mind home construction and hard hats putting up high rises, and that’s the usual experience most of us have. But Orion Group Holdings occupies a specialty niche in the industry, focusing on civil marine construction, industry, and commercial concrete. The company owns subsidiaries that each concentrate on a different niche, allowing them to hone their skills in some vital – even if less recognized – sectors of the construction world.The company’s share price through this year shows both its resilience and the importance of the construction industry to the economy. ORN shares fell sharply in mid-winter, when the coronavirus hit hard at the economy by forcing lockdown policies – but it has regained ground as the economy has reopened, and has recouped more than half of its losses from that time. Overall, however, ORN is still down ~20% year-to-date.Orion’s quarterly fiscal results also show the tale. The company registered a sequential loss in Q1, but has shown gains since then. For the calendar third quarter, ORN reported $189 million at the top line. EPS has performed even better this year, beating the forecast in Q1 when a loss was expected and the actual result was an 8-cent per share profit – and spiking to 23 cents per share, or 187% above the forecast, in Q3.In a positive development heading into the end of the year, in November Orion’s concrete segment won three major contracts in Texas. The projects are located in the Houston area, and total some $52 million.Noble analyst Poe Fratt feels that this stock has room for growth, and promises returns for investors. He writes, “[We] believe that the current stock price doesn’t fairly reflect the ISG restructuring improvements and the positive outlook. A combination of above-average backlog, improved profitability, lower financial leverage and attractive valuation of 2.8x 2020E EBITDA and 2.4x 2021E EBITDA supports our view that the risk/reward profile remains compelling.”Fratt’s $8.25 price target implies a 101% upside for the year ahead. He rates the stock as Outperform (i.e. Buy). (To watch Fratt’s track record, click here)The two recent Buy ratings on ORN make the analyst consensus view a Moderate Buy. The average price target of $8.13 suggests a 100% growth potential for the next year. Shares are currently selling for $4.08. (See ORN stock analysis on TipRanks)To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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