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Five stocks to benefit from Star Wars: The Force Awakens

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Written by:
14/12/2015
A list of potential investments hoping to profit from the Force of the latest Star Wars movie.

Star Wars: The Force Awakens, the seventh movie from George Lucas’s Star Wars franchise, hits cinemas in the UK on 17 December, then a day later in the US.

It is almost 40 years since the original movie was released in 1977 and is expected to break cinema records around the world.

With an estimated budget of $200m, The Force Awakens is predicted to be a major box office success. The film has been tipped to be the first to gross over $3bn worldwide at the box office.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, says:Cashing in on the Star Wars franchise they be.

“With the film expected to be such a huge hit, many companies are hoping to feel the Force. Walt Disney, owner of Lucasfilm, heads the list.”

Here, Bowman reveals why and how Walt Disney – and four other companies – will benefit:

Walt Disney (US epic: DIS)

Disney’s media empire spans TV networks, theme parks and resorts, TV and movie studios, consumer products and interactive media.

Previous Disney film hits such as Frozen grossed some $1.2bn, while Marvel’s The Avengers grossed just over $1.5 bn. Avatar, distributed by rival 20th Century Fox, grossed $2.8bn, the current record. Commentators have suggested that The Force Awakens could gross over $3bn worldwide at the box office, no doubt boosting Disney earnings.

Disney’s fourth quarter 2015 results announced in early November saw revenues for its Consumer Products division rising by 11% to $1.2bn. Management highlighted Star Wars merchandise as a driver of performance. The shares are listed overseas in the US, with analyst consensus opinion currently pointing towards a buy.

Cineworld (UK epic: CINE)

Cineworld is a leading European cinema group with 1,999 screens across 216 sites in the UK and Ireland, Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania and Israel.

In their last trading update, management highlighted that two forthcoming major releases Star Wars: The Force Awakens and Spectre, the latest Bond movie, were likely to be big draws at the box office. By the end of the year the Group will have over 2,000 screens. The shares are a constituent of the UK’s FTSE-250 index, with analyst consensus opinion currently signifying a buy.

Hasbro (US epic: HAS)

Hasbro is a toy and game manufacturer, whose other interests include television programming and digital gaming. Back in 2007, Forbes estimated that Star Wars toys accounted for $9bn of the franchise’s sales, billions more than the films themselves.

The group’s third quarter results announced back in October (2015), saw net underlying revenues rising by 9% with the Boys category up 24% to $593.1m. The retail launch of Star Wars: The Force Awakens product, was a key driver of that growth along with strong contributions from NERF toys and Jurassic World products..  The shares are listed overseas in the US, with analyst consensus opinion currently pointing towards a strong hold.

Regal Entertainment Group (US epic: RGC)

Regal Entertainment Group (NYSE: RGC) operates the largest and most geographically diverse theatre circuit in the US. As of late September (2015), it operated 7,357 screens in 571 theatres throughout 42 states. Regal operates theatres in 46 of the top 50 US designated market areas.

At its Q3 results, announced back in late October (2015), management noted that, “With a number of highly anticipated releases scheduled for the upcoming holiday box office season, we remain optimistic about the potential for box office success for the remainder of 2015 and early 2016.” Again, the shares are listed on the US market, with analyst consensus opinion currently denoting a buy.

Microsoft (US epic: MSFT)

US computing giant owns the video games brand Xbox One. Star Wars game Battlefront is now being sold for use on Microsoft’s Xbox One console and is likely to prove a big Christmas seller. Microsoft’s first quarter results announced back in October (2015), saw membership for its online interactive gaming service jump by 28% to 39 million live monthly active users. The technology giant’s shares are listed on the US market, with analyst consensus opinion currently denoting a buy.

 

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