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AMC Gets More Theaters, But This Little-Known Stock Stole the Show Today

By Dan Caplinger – Dec 22, 2021 at 1:03PM

Key Points

  • Markets rose on Wednesday.
  • AMC Entertainment Holdings lost ground but announced some new theater deals.
  • Shares of a maker of tires and wheels got a boost from an executive's call for fair valuations.

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Find out how an overlooked player in heavy equipment got a big jump on Wednesday.

The stock market continued to push higher on Wednesday, as many foresaw a traditional end-of-year rally that could take the Dow Jones Industrial Average (^DJI 0.41%), S&P 500 (^GSPC 0.56%), and Nasdaq Composite (^IXIC) to new all-time highs. None of the worries in the market are likely to go away quickly, but if they don't flare up into something more immediately problematic, then market participants seem confident that there could be further gains.


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Data source: Yahoo! Finance.

AMC Entertainment Holdings (AMC) has been in the news all year. After losing ground in the regular session, AMC made an announcement regarding ongoing strategic moves that led some after-hours traders to take a second look at the company's prospects. However, making a much larger move than AMC was a small but important player in the heavy equipment space. The chairman of the board made an impassioned argument for why the company is undervalued. Below, you'll get the scoop about AMC's latest news and then learn about this little-followed industrial company.

AMC's show goes on

AMC Entertainment Holdings saw its stock fall about 5% in the regular trading session on Wednesday. The shares were little changed after hours, but investors nevertheless took note of the movie theater operator's optimism about its future prospects.

Several rows of moviegoers in a theater enjoying a movie.

Image source: Getty Images.

AMC said it has entered into lease agreements on two theater locations, one in the California city of Northridge and the other in Chicago. The two were formerly known as the Pacific Northridge Fashion Center 10 and the Arclight Chicago 14. AMC expects to reopen the locations under new names sometime in the spring of 2022.

The movie operator pointed to success stories with two previous reopened locations: AMC Americana at Brand 18 and AMC The Grove 14 have been among the top 10 box office performers in the Los Angeles area and consistently finish in the top 30 nationwide.

AMC hopes to reopen other properties as well, with CEO Adam Aron noting that "AMC is staying on offense, looking for opportunities to strengthen our company." Lease transactions don't necessarily require as much upfront cash as outright acquisitions would, so the theater company appears to be sensitive to preserving its financial cushion while it hopes for a more sustained rebound in theater-going among consumers.

A Titan-ic rise

One of the biggest winners on the day, though, was Titan International (TWI -0.86%), whose shares were up 16%. The West Chicago-based manufacturer of wheels, tires, and undercarriage systems and components for heavy off-road agricultural and construction equipment made comments about a potential acquisition of a competitor.

Board Chair Morry Taylor commented on news that Japanese tire maker Yokohama has reportedly made an offer to purchase the off-highway wheel business of Swedish industrial machinery company Trelleborg for $2 billion. Taylor estimated that Trelleborg's wheel business is likely to generate about $1.4 billion in annual revenue for 2021.

Taylor contrasted what he portrayed as Titan's much stronger competitive position in the industry as the self-proclaimed market leader in steel wheels. He also cited the company's innovation, saying that the majority of new wheel and tire designs serving the agricultural industry have come from Titan.

With Titan expecting sales to surpass $2 billion in 2022, Taylor argued that his company should arguably have a higher price than Trelleborg. Yet even at the $2 billion reported price, Titan's stock would trade above $24 per share -- compared to the $9 it fetches now.

It's rare to see company directors make such explicit pushes for why their shares are undervalued. It'll be interesting to see what comes of the reports of a Yokohama-Trelleborg deal and whether it prompts further gains for Titan's share price.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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