Business & Investment

Why Cineplex (TSX: CGX) is so bullish at $ 11

I am one of the biggest bears Cineplex (TSX: CGX) In stock for many years. As you may remember, we recalled the first plunge in CGX stocks when our dividend lover was still close to record highs. I sounded a warning, warned investors about the drop, and emphasized four reasons why it was time to break the name.

Cineplex strain pain continues

Fast-forwarding towards today, it’s hard to remember the days when Cineplex shares were able to reward investors with above-average capital gains and abundant dividend increases. The stock fell off a cliff and was cut in half many times, punishing those who dared to catch the falling knife. The stock was destroyed in two and a half years, losing more than 91% of its value from peak to trough.

Prior to the strain’s tone down following the strain meltdown caused by the coronavirus last year, I was quite a bear to its name. Even before the pandemic, Cineplex’s business was against it. The COVID-19 pandemic turned a difficult battle into a full-blown crisis, as the company couldn’t even fill the seats if it wanted.

Stock horror movies can evolve into a vulnerable story

For Cineplex, still facing many serious headwinds that extend beyond what was caused by this pandemic, it was a disastrous fall from grace. This pandemic only accelerated the continued rise of video streamers. That said, as I mentioned in the previous article, I think we’ve already reached a turning point in stocks, urging investors to buy and change stocks while trading for $ 5.

“What’s causing Cineplex’s song changes? Rating. Inventory plummeted. Everything that might have gone wrong didn’t work for Cineplex. After this pandemic ended, a huge business Erosion is expected to be heavy over the years, but with some decent liquidity position, I think Cineplex can survive this crisis. “I wrote. Previous work Dated November 5, 2020. “It used to be book value, but betting on the Cineplex at the peak of pessimism isn’t all a bad idea, even if trends suggest that you’re likely to lose money in the short term. I will. “

Today, a variant of COVID-19’s concern can cause a recent partial reversal of economic resumption. Such a scenario will have a significant impact on the upcoming quarters of Cineplex as the top line is dragged towards zero and investors’ expectations for a post-pandemic recovery begin to diminish.

Cineplex: The risk-reward trade-off looked better than ever

Despite short-term pressure, Cineplex strains still have significant risk-reward trade-offs for those who believe the vaccine will end this horrific pandemic at some point in the next 18 months. .. The federal-approved COVID-19 vaccine is currently in development. It will be late, but I think it will eventually reach some normal state.

And as we enter the post-COVID world, consumers want to increase their discretionary spending on the abundant 2021 movies that people have postponed for months, so Cineplex shares want to be owned by you. Is the name. I think the first quarter of 2021 will be the last hailstorm for Cineplex. Since then, the company is trying to recover from one of the worst crises in history and could race.

Bet only on those who are willing to lose their name, as there is still a risk of future undiscovered COVID-19 mutants that could make the vaccine obsolete.Nobody wants to think about such a nightmare unlikely scenario, but as an investor, you have to Manage risk better..

Friend, please be stupid.

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Stupid contributor Joey Frenet There are no positions in any of the listed stocks.

Why Cineplex (TSX: CGX) is so bullish at $ 11 Why Cineplex (TSX: CGX) is so bullish at $ 11

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