Marvel Enterprises
Where is Marvel Headed?

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By netman622
December 29, 2004

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What does '05 hold for Marvel? Good question. It is good to see Marvel trading back around $20. Truth be told, Marvel should be trading higher. But that is something that I can't control. If management does its job and stays aggressive the price will move to a fair level.

As I have been looking at my stock portfolio, I have been evaluating what to buy (potential good values) and what to sell (milked it for what it is worth). Where does Marvel stand? As I have said, Marvel is undervalued. Marvel's fundamentals are still strong--they get stronger all the time. As a matter of fact Marvel is a solid stock for the whole year. There was a good post on another Marvel board that showed how Stocks have (generally) made most of their growth the 1st third of each year. There are reasons for that. As a matter of fact there are many axioms and truisms that observe when it is best to buy or sell. Why is Marvel "good" for the whole year? The way Marvel has layered its licensing and revenue streams it makes money through out the year, and it has "events" that can drive the price. For example:

A. Toy sales. This certainly is an area that can be "driven" by Christmas sales, but it is my observation that toys are bought all year. In my family we have birthdays that provide "Marvel toy buying opportunities" in: June, September and November. My kids save their money and when they have enough to buy a "cool" toy, they do so throughout the year. Toy sales can be driven in the spring, summer and fall by the Marvel movies that are coming or have come out.

B. Publishing. Once again a book or comic is not a seasonal event. I have not seen numbers from Marvel that shows whether the publishing sales go up or down depending on the time of year. While publishing is not Marvel's main revenue driver, it is a steady income. Publishing is the R&D for Marvel. It is also Marvel's Pied Piper. As kids (and us older "kids") read what Marvel publishes, it creates an appetite for more Marvel items.

C. Movies. It is easy to see how Marvel's stock can be driven by the "tent-pole" events of a movie. If anyone has been with Marvel very long you have seen "run-ups". I remember the first X-Men run-up. I also remember the X-Men decline as well. Run-ups and declines have come and gone. X-Men 1, Spiderman 1, Daredevil, Hulk. They were interesting to go through. I believe the wild run-ups and declines that are related to the movies are past. With our steady revenue stream the wild fluctuations will be lessened (my guess anyway). But I do believe that movies will drive our stock price. They will drive the value of Marvel when the movie comes out AND when the DVD hits the market. In essence we get to drives for the 1 movie.

D. Licensing money will pour in throughout the year. When Marvel signed their deal with Burger King for the summer Fantastic Four campaign, there was upfront money (if I understand the deal). There are such deals being negotiated through out the year. While all deals are not the same size (in money being brought in), they do help Marvel to have a steady income all year. This stands in stark contrast with Pixar. While Pixar will have to wait quite a while for the next event to drive their stock price and provide revenue, Marvel is printing $$$$.

My only concern with Marvel is the "short" situation and management's passive reaction to it. I believe that Marvel will eventually shake the shorts off, whether it is this year or next we'll see. I believe it will be sooner if management is aggressive. It will be later if management sits on their hands.

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