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“Hunger Games” Debut Boosting This Small Cap Stock

Posts by Ian Wyatt

“Hunger Games” fever is sweeping the nation, and one small cap stock in particular is reaping the benefits.

Lions Gate Entertainment (NYSE: LGF) shares are up 3.5% this morning after the much-anticipated debut of “The Hunger Games” movie didn’t disappoint at the box office, raking in $214 million globally over the weekend. It was the third-biggest opening weekend ever for a movie, trailing only the “Harry Potter” finale and “The Dark Knight” Batman movie in 2008.

Lions Gate is the movie studio that produced “The Hunger Games”, which was adapted from a bestselling book by author Suzanne Collins. The movie has been a godsend for the relatively small-time studio, which hasn’t been profitable in four years.

Shares of Lions Gate have climbed 80% in 2012. The stock was trading at $7 a share as recently as late October. It’s more than doubled since, to $15.07 a share this morning. During that time the company’s market cap has also doubled, from $950 million to $1.9 billion.

What will continue to make Lions Gate a compelling stock is that the studio also owns the rights to the two sequels to “The Hunger Games” – “Catching Fire” and “Mockingjay” – which are scheduled to be released in the next couple years.

Meanwhile, the success of “The Hunger Games” is just getting started. After its near-record opening weekend, the movie is sure to have a long, prosperous run in theaters. That could help make Lions Gate – which lost $53.5 million last year – a profitable company. And the stock could continue to flourish.