Lions Gate Entertainment
In a sense, Hostel's meaty take shouldn't have been so jarring. After all, anyone who saw the ads on television immediately made a connection -- to Saw and Saw II, that is. The Saw franchise opened a door to the commercial possibilities of dark entertainment -- when you combine this genre with a slick marketing campaign targeted to the young viewers of shows like Supernatural and Smallville, you have the potential for a gangbusters opening. Hostel essentially took the Saw formula, elevated the monstrous milieu to the next level, and brought in the cash. The ads almost dared people to see the film lest they be branded a coward.
Hostel and Saw are two reasons why I like Lions Gate as an interesting stock idea. The company is like Marvel Entertainment
Yet nothing about Lions Gate's business thesis has really changed. Remember, this stock is a way to play a moviemaking entity that isn't as dragged down by huge, lumbering assets like other big media conglomerates -- think Time Warner
With its large library, decent cash flow numbers, low capital expenditures, and a penchant for being a perennially attractive takeover target, Lions Gate is still a compelling idea to me. Since Hostel is clicking at the theaters, and the home video release of Saw II will be arriving just in time for Valentine's Day, I think the situation at Lions Gate will improve over time. The PEG ratio of 1.55 might be a bit high at the moment, though, so perhaps it's worth waiting for a pullback.
Lions Gate shareholders probably feel as tortured as the victims in Hostel, but hey, this is the movie business -- people will always want a good scare. I believe this company will be profitably delivering a lot of them over the long haul.
More Takes on Lions Gate Entertainment:
Check in at the Fool's Lions Gate Entertainment discussion board -- it's no torture, I promise.