Investing in Your Backyard: Hollywood and Vine

Break out the champagne and caviar. It's time to toast the Oscar winners!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're visiting the site of last night's Academy Awards presentation, so our action takes place around Hollywood, California.

Hollywood itself is too small for this kind of review, as only two publicly traded companies list headquarter addresses between Fairfax Avenue and the Hollywood Hills, so the entire city of Los Angeles makes a cameo here. But there's plenty of movie magic to be found around Hollywood itself, so there will be no shortage of glitter and glitz in this week's edition.

If you happen to live on Mulholland Drive, you already have a few advantages when it comes to evaluating the local market. There's easy access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know whether the business climate matches the Southern California weather -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are the largest companies headquartered in the City of Angels:

The big three
The largest game in town isn't a movie studio, but rather a biotechnology giant. Our Motley Fool CAPS players certainly like what they see in Amgen, including all-star stock picker pennysplants:

"Best run biotech trading significantly below fair value. Company repurchasing shares. Wide moat, average risk, fairly low volatility. Deep pipeline. Increasing R&D expenditures. Knows how to commercialize pipeline effectively. Would make a nice anchor in long term portfolio (tax advantaged or not). Don't get all bent out of shape about patent expirations, etc. It'll all be okay."

But it isn't a universally loved stock. roblester takes the opposing view, for example:

"Lost innovative edge. Current CEO is mediocre. Living on past glory."

Disney brings us back to the filmed entertainment fold. The Mouse is based out of Burbank, right next to Hollywood. That makes it the only major movie studio or television network with headquarters in L.A. -- the rest tend to do business out of their New York offices. Twentieth Century Fox may call Hollywood home, but parent company News Corp (NYSE:NWS) doesn't, for example. And of course, the house that Mickey built has plenty of friends in CAPS, like perennial score leader TMFEldrehad:

"Who can bet against the mouse? Our family has annual passes to Disneyland, and we love the place. Of course, when we bought the passes I was thinking, "A year at Disneyland - as often as we like, for one price? Great!" Unfortunately I was outsmarted by the mouse - as that 'one price' is far from the total we'll be adding to the corporate coffers this year. I will not stop at the popcorn stand or the churro cart, and just how many plush Disney characters does a two-year-old need anyway? Yeah, right, just who's kidding whom?"

But there's always a dialog over these big companies in CAPS. tlevine984 retorts with growth concerns: "Lack of growth businesses to support strong growth. Expect company to trail broad market over the near term."

And then there's oil and gas explorer Occidental Petroleum. According to several of our players, ExxonMobil (NYSE:XOM) is about to acquire this company at a very low valuation.

Spread your wings
As the second-largest city in America, Los Angeles is home to every kind of company large and small -- from health care and manufacturing to semiconductors and video games. I found 251 publicly traded tickers in this town, including 11 current and one former Motley Fool newsletter recommendations. There are 17 five-star CAPS stocks, but 38 one-star issues; 38% of these companies have yet to earn a star rating, and two-thirds of them don't have a single player with an opinion.

The entertainment industry is, of course, heavily represented. Disney is the 800-pound gorilla with big, round ears, but Lions Gate Entertainment and DreamWorks Animation SKG (NYSE:DWA) live in Santa Monica and Glendale, respectively. Hispanic television gigante Univision (NYSE:UVN) has offices on the Avenue of the Stars, and the DirecTV (NYSE:DTV) has offices directly across the street from LAX.

That's one of the world's busiest airports, supplemented by another six major aviation hubs in the area. The L.A. harbor is the most trafficked shipping port in the world, and two of the four major railroad networks connect here. The highway system is legendary in both traffic capacity and rush-hour backups. It's nearly an ideal transportation infrastructure, despite the extreme Western location, and that's always good for business.

The city itself imposes some heavy business taxes, while many of the suburbs have much friendlier tax rates, which is why much of the business district is outside city limits.

I'd be remiss not to mention the educational facilities in Southern California. Los Angeles houses some of the largest, best-funded universities in the country, such as UCLA, USC, and Caltech, providing fertile recruiting grounds for prospective businesses. And you won't find a more respected set of film schools anywhere else.

A city this large attracts plenty of business -- some of it great, but much of it entirely forgettable. It's the law of averages at work, but there's no question that you can find some great investment ideas around the Hollywood Hills. L.A. is no Twin Cities, Seattle, or Austin, but it holds more promise than kindred spirit Miami.

Do you agree? Disagree? Feel free to weigh in on the Tinseltown market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if La-La Land isn't your 'hood, maybe we'll come round where you live the next time.

Disney and DreamWorks Animation are Motley Fool Stock Advisor recommendations. Get the big picture with a free 30-day trial subscription.

Fool contributor Anders Bylund is a Disney shareholder but holds no other position in any of the companies discussed here. He's ready for his star on the Walk Of Fame, though. You can check out Anders' holdings if you like. Foolish disclosure always has an acceptance speech ready.