Best Stock for 2008: Marvel

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Ring in the new year with more stocks for 2008.

I've made my adoration perfectly clear for Marvel's (NYSE: MVL) stock. Not to put too fine a point on the argument, I think this might be the single best investment you could make for 2008.

As you may know, the company has decided to go it alone in the movie industry and finance new superhero films through an innovative loan structure. First up will be Iron Man and another, presumably less artsy, look at The Incredible Hulk. The profits from those movies will start out paying back the money borrowed to make the pictures in the first place, and the rest will go straight into Marvel's coffers.

That's different from the Spider-Man franchise, where Sony's (NYSE: SNE) Columbia Pictures takes home most of the cake, or the X-Men franchise, which is produced mostly with News Corp. (NYSE: NWS) subsidiary 20th Century Fox's cash, and therefore enriches Rupert Murdoch more than it does Marvel.

Let's say Iron Man fails miserably at the box office, despite having star power at the helm (Jon Favreau) and in front of the camera (Robert Downey Jr., Gwyneth Paltrow). Maybe Roger Ebert turns out to be allergic to iron or something. Whatever the reason, let's say the movie costs $186 million to make and pulls in only $100 million in worldwide box-office receipts. Ordinarily, the production company would be seriously in the hole here. But not Marvel.

Instead, the financial backers for the first wave of movies -- namely HSBC (NYSE: HBC) and GE (NYSE: GE) -- would swallow the losses, write off the rest of the borrowings, and get the rights to make Iron Man movies. I'd imagine the banks would then sell those rights. In the case of Iron Man, Marvel would simply be back to making movies with some partner studio again, just as it will continue to do with its established hit franchises. The worst thing that could happen is that Marvel probably wouldn't get to pick its partner.

That's the entire downside, and it doesn't sound horrible at all. No monetary risk, only intellectual property. Let's see how much Marvel -- the company that envisioned the characters in the first place -- truly can make when it can reap all of the producer fees from movies made under its own total creative control. Then watch the stock price jump as Mr. Market finally gets it.

That's just the beginning: Marvel envisions about $46 million in new operating income from the first two movies in 2008 but nearly $180 million in 2009 as the second wave comes out and the first two movies go into heavy rotation on pay-per-view and HBO-style movie channels. But wait -- it still gets better. These numbers don't include toy sales and other merchandising, which should bring in between $45 million and $200 million per film.

I'm not saying Marvel will make more money than Disney (NYSE: DIS) next year. But the seeds for a mighty profitable future have been sown, and we could very well be seeing the next entertainment giant in its hatchling stage. Jump aboard now, and thank me in 2009.

Or, if you'd rather not take one guy's word for Marvel's brilliance, you can take a free 30-day trial to our Motley Fool Stock Advisor newsletter service, where an entire team of our top analysts keep you updated on this stock. It's a three-time Stock Advisor recommendation, and you'd have a heart-stopping 650% return if you'd invested on the original recommendation in July 2002.

And if you believe in Marvel for 2008 (sounds like a presidential campaign, doesn't it?), please go ahead and rate the stock "outperform" in Motley Fool CAPS for me. We can get this ticker back to the five-star rating it so richly deserves. This is easy money, folks.

Further Foolishness:

• Marvel Is a Screaming Buy
• Why This Stock Is a Winner
• Companies You Should Buy Right Now