Perhaps you’ve heard: There’s this little movie called Star Wars coming out in two weeks. To prepare for this seismic event, people are buying up Star Wars movie tickets, Star Wars toys, Star Wars video games—anything to get ready for the return of one of the most iconic franchises in movie history.
They’re also buying up Star Wars stocks.
The Star Wars franchise is so big, its return is a cash cow for a variety of different industries. Within those industries, several companies in particular stand to benefit from the return of the Jedi. And like all those light saber-toting fans snatching up opening-night (December 18) tickets, investors are buying up stocks of companies sure to benefit from the Star Wars release.
Here are the five “Star Wars stocks” investors are already buying in droves—and they’re likely to continue buying them if the movie is the smash hit everyone is expecting:
Star Wars Stock #1: Disney (DIS)
This is the obvious one. Disney famously bought the rights to the Star Wars franchise from creator George Lucas in 2012 for $4 billion. Now comes the payoff—The Force Awakens is expected to gross $2 billion at the box office globally, and could rake in an additional $5 billion in sales of toys, video games and other products in 2016 alone. Oh, and there are two more Star Wars films still to come in 2017 and 2019.
In the end, the $4 billion Disney paid for the Star Wars rights will be a bargain—and investors know it. It’s a big reason why the stock is up 20% since the market bottom in late August, and has traded above its 50-day moving average since early October. Unless the movie falls well short of expectations (not likely), that momentum isn’t likely to slow while The Force Awakens is still in theaters.
Star Wars Stock #2: AMC Entertainment (AMC)
Speaking of theaters, think of the money they’ll make from all the people lining up in Yoda and Darth Vader masks and eating all their overpriced popcorn, soda and king sized Kit-Kat bars over the next month or so (especially over the holidays when many have time off). Many of those Star Wars fans will watch the movie in AMC Theaters—it operates 22 of the 50 highest-grossing theaters in the U.S., and owns the No. 1 or No. 2 market share in the nation’s 15 largest media markets.
As for the stock, AMC is actually down quite a bit from its March peak at 35, and has been stuck in the 24-to-27 range since September. However, with earnings per share growing at 65% and another 38% year-over-year bump expected in the current quarter, AMC is a decent, somewhat speculative value play should all those Star Wars showings spur a nice earnings beat come February.
Star Wars Stock #3: Mattel (MAT)
My Star Wars figures were my prized possession when I was four years old, back when The Return of the Jedi had just come out in theaters. I imagine the new Star Wars figures and toys that are hitting the shelves now are having the same profound effect on today’s four-, five- and six-year-olds.
Mattel is selling a lot of those toys. So are Wal-Mart and Target, but their inventories are so vast that their Star Wars toy sales make less of a dent on total revenues. Mattel, on the other hand, just sells toys. And the company is turning some of its iconic Hot Wheel cars—which account for more than 11% of total sales—into Star Wars cars.
Who knows how big a hit the Star Wars Hot Wheels will be? In the meantime, after a couple of very down years, MAT stock is showing some promising signs of life, bouncing from 19 to 24 in the past two months.
Star Wars Stock #4: Electronic Arts (EA)
Having signed a 10-year exclusive licensing deal with Disney in 2013 to make Star Wars games, this gaming company is everywhere lately. You can’t flip on the TV without seeing a commercial for one of EA’s Star Wars games. So it’s probably no coincidence that the stock has also gone into hyperdrive: EA is up 47% year-to-date, and 9.5% in the last three months despite a pretty steep pullback from 76 to 67 in November.
With analysts anticipating a 46% jump in EPS and 27% revenue improvement during the holiday quarter, the latest dip in EA may have opened up an ideal entry point.
Star Wars Stock #5: IMAX Corporation (IMAX)
Our final “Star Wars stock” is on this list for the same reason as AMC. You’re probably familiar with IMAX: it’s the large-screen theater chain that allows viewers to see movies on much larger than usual (72-foot wide) screens. Big action movies like Star Wars often do particularly well at IMAX theaters, as viewers want to get the full experience of all the explosions and special effects.
Box office sales at IMAX’s 800 theaters (in 57 countries!) are likely to go through the roof starting December 18. In anticipation of that boom, investors have been buying up IMAX for months: since late August, the stock is up 33%, jumping from 29 to 38. Since topping 37 in late October, the stock has been building a solid base between 37 and 39.
Don’t be surprised if it breaks to the high side once those Star Wars opening-weekend numbers start trickling out.
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