IMAX stock could be ready for a breakout, this portfolio manager says

IMAX Corp (IMAX Stock Quote, Chart NYSE:IMAX) has been on a good run of late, gaining 20 per cent in value since late July. But investors can expect a lot more upside, says ValueTrend Wealth Management’s Keith Richards, that is, if the stock can break through its high-$20 resistance level.

On July 25, Imax delivered its second quarter financials, which featured a consensus beat on EPS at $0.30 per share compared to the Street’s $0.26 per share (all figures in US dollars). Revenue was up year-over-year at $98.8 million compared to last Q2’s $87.8 million, buoyed by strong box office results from a number of early 2018 blockbusters such as Jurassic World 2 and Avengers: Infinity War.

“Not only are studios emphasizing blockbuster-type content, consumers are increasingly seeking differentiated ways to experience that content,” said Imax CEO Richard L. Gelfond. “We believe Imax is uniquely positioned to benefit from these trends, especially with the roll out of our new Imax with laser experience, which we expect will further increase the differentiation of The Imax Experience.”

As a result and after an up-and-down first half of the year, IMAX began climbing. Currently trading at $26.00, the stock is poised to break a 12-month high of $26.70 set last November.

But the real fireworks could soon follow if the stock can shoot past its low-to-mid $20 range, says Richards, portfolio manager and technical analyst for ValueTrend, in conversation with BNN Bloomberg.

“There was a lid [over 2016-2017] and then the stock broke down to a consolidation pattern and it has been consolidating again,” says Richards. “There seems to be a tonne of stocks these days that are just kind of bumping along in a sideways pattern.”

“What you want or hope to see is a breakout. The lid here might be $27 or $28 —if that breaks, then that would be very, very bullish,” he says.

IMAX has made a few moves this month that have piqued interest, one being a revelation by CEO Richard Gelfond that his company had been in “active discussions” with streaming services like Netflix to screen their original content. The company also announced plans to open 14 new laser theatres in China through state-owned Wanying Cinema Line. More lucrative content is in the works, as well, as Imax announced last week a deal with Universal Pictures to release big name films such as First Man and Glass.