3 Entertainment Stocks Profiting From a Frightening Box-Office Trend

Moviegoers still enjoy a good scare. Last month's The Conjuring beat out not only Turbo but also comic-book adaptations Red 2 and R.I.P.D. with a $41.9 million opening, the second-highest debut ever for a supernatural horror film, Box Office Mojo reports.

The Conjuring is the latest paranormal thriller to win over audiences. Source: Warner Bros.

The film has since earned $167 million worldwide on a mere $20 million production budget, a huge win for Time Warner's (NYSE: TWX  ) Warner Bros. Studios. I'd call it an outlier if paranormal thrillers weren't filling the coffers of several mid-tier entertainment stocks.

In January, Universal's Mama grossed $146.2 million worldwide over an 11-week run in theaters. Last summer's The Possession earned $85.4 million on a $14 million budget. Two months later, Sinister grossed $77.7 million after costing just $3 million to produce.

What big-budget superhero flicks have become to big-name studios such as Walt Disney, small-budget horror flicks have become for Hollywood's second tier.

3 entertainment stocks with scary potential
In a way, it's always been like this. Horror flicks entertain at the basest level by scaring the bejeezus out of us without putting us in any physical danger. From Alfred Hitchcock to George Romero to Roger Corman to Guillermo Del Toro, the genre has produced more than its share of legends while supplying studios with a steady stream of profits.

Lately, our culture's appetite for apocalyptic fare has grown nearly insatiable. Shares of AMC Networks trade near a 52-week high in part because of the success of zombie thriller The Walking Dead. At theaters, a number of high-potential supernatural flicks are in the works. Here's a closer look at the entertainment stocks poised to profit.

1. Viacom (NASDAQ: VIA  ) Home to Paramount Studios and one of the top supernatural franchise of all time: Paranormal Activity. On a worldwide basis, the series' four films have grossed $718.7 million -- or $179.7 million each, Box Office Mojo reports. The 2009 original's "found footage" style, popularized by The Blair Witch Project a decade earlier, cost just $15,000 to make. Paramount spent $5 million on last year's fourth installment. A fifth film is due in October.

2. Sony (NYSE: SNE  ) . Also known as the parent studio for Screen Gems, which brings the horror classic Carrie back to the big screen two weeks before Halloween. The 1976 original, which starred Sissy Spacek in the titular role, earned $33.8 million at the time and $129.5 million when adjusted for inflation, according to Box Office Mojo.

3. Lions Gate (NYSE: LGF  ) . Responsible for both Sinister and The Possession -- as well as the Saw franchise -- the studio screens You're Next on Aug. 23 and then plans to follow November's Ender's Game and The Hunger Games: Catching Fire with the horror flick Jessabelle in January. A long history of cheap-but-frightening successes, and more than a few hit TV productions, has allowed Lions Gate to compete for bigger budget franchises.

Some horror stories end well ...
Among the films coming out soon, I like Carrie's chances to outperform most. But as a studio, I like Lions Gate's diversity of franchises and I've picked the stock to outperform in CAPS as a result. 

Chloe Moretz stars in the remake of Carrie, coming in October. Sources: YouTube, Screen Gems.

As good as the entertainment sector has been to investors lately, the fragile American economy threatens to kill portfolio profits before many of us will get to collect. Warren Buffett put it at its most frightening when named one macro trend "the tapeworm that's eating at American competitiveness." What industry did he mean, and how can you protect yourself? Find out in our special report: "What's Really Eating at America's Competitiveness." Your copy is free -- just click here for immediate access.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2599646, ~/Articles/ArticleHandler.aspx, 10/1/2016 11:49:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 14 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:02 PM
LGF $19.99 Down -0.32 -1.58%
Lions Gate Enterta… CAPS Rating: ****
SNE $33.21 Down -0.03 -0.09%
Sony CAPS Rating: ***
TWX $79.61 Up +1.00 +1.27%
Time Warner CAPS Rating: ****
VIA $42.82 Up +0.30 +0.71%
Viacom CAPS Rating: ***