I'm not a fan of predictable celluloid.

If I'm sitting in a movie theater and I can predict everything that's about to happen, I may as well grab my colossal tub of popcorn and head home. It's not entertainment if I can script it through in my head.

Investing is another story. If an investor is able to tell where a certain company is heading, then that's the ticket to wealth.

This is what I try to do in this column every week. I screen a stock, bash it, and advise you to leave the multiplex. I'm no meanie. I come right back with a triple feature in the form of three stock picks that I think will be better replacements in your portfolio.

Who gets tossed out this week? Come on down, National CineMedia (Nasdaq: NCMI).

Fade to black
If you've ever seated yourself at a movie theater before the lights dim and the feature presentation kicks in, you may have very well been treated to NCM's calling. The company runs the largest multiplex advertising network. There are 16,800 screens around the country on NCM's network, including biggies AMC, Cinemark (NYSE: CNK), and Regal Entertainment (NYSE: RGC).

At first blush, this may be a concept that attracts you more than it repels you. Sure, nobody likes to sit through a barrage of ads after buying a movie ticket, but it's a money maker that is here to stay for the exhibitors.

Movie theater chains are also coming off a record year. NCM claims that a whopping 680 million patrons viewed flicks last year on NCM's system. Obviously a lot of those celluloid buffs are being counted several times, but it's clear that NCM is able to present advertisers with a captive audience of cinematic early birds.

NCM's story gets even more attractive when you consider that 15,400 of NCM's screens are digital -- allowing it greater flexibility to mix up ads and target on the fly. Oh, and the company recently initiated a dividend policy. The stock is commanding a juicy 4% yield at the moment.

So why am I about to rip into this seemingly promising company? Well, let's tap into this monstrous 2009. The company reports earnings next week, but its most recent guidance calls for revenue to have climbed just shy of 3% this year. Analysts see NCM delivering a profit of $0.60 a share -- flat with last year's showing.

If this is such a great business and exhibitors defied the recession, why is NCM so flat? It has come up short against analyst guesstimates in two of the past four quarters, and the near term offers only marginal improvement. NCM's guidance for 2010 calls for revenue growth to accelerate to between 5% and 8%, but this doesn't seem like the kind of growth that merits a stock trading at 23 times forward earnings.

I also feel that as movie theaters ramp up ticket prices for 3-D and big-screen experiences that patrons will demand fewer commercials and exhibitors will have the flexibility to give the theater audiences what they want. The digital push is exciting, but it may also level the playing field for potential competitors. I mean, if you can't picture Google (Nasdaq: GOOG) -- a local search dynamo -- contemplating this space in a few years, you're just not thinking.

In short, ho-hum growth and a future that has more potential potholes than upside catalysts isn't the type of screening that has a happy ending.

Good news
As I do every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting the heave ho. Let's go over the three fill-ins.

  • IMAX (Nasdaq: IMAX): As another silver screen darling reporting earnings next week, it's easy to get more optimistic about IMAX's fortunes. Analysts see IMAX revenue growing 56%, and profitability finally breaking through. Wall Street's outlook for 2010 calls for a 17% revenue advance and profits popping sixfold to $0.60 a share. Why is IMAX growing so quickly compared to NCM when they're both slaves to the big screen? Well, the IMAX experience continues to gain in popularity. More multiplex operators are converting screens to grander IMAX sensory candy and more moviemakers are making sure that they digitally remaster their blockbusters for IMAX release.
  • Focus Media (Nasdaq: FMCN): China's leader in outdoor advertising also runs a small yet promising in-theater platform. Its modest network of over 120 screens delivers three minutes of advertising before every screening. In other words, there is more upside for growth, and this is before we even consider China's headier economic growth rate. Focus Media has substantial interests in everything from online advertising to digital elevator posters, but the bottom line is that analysts see Focus Media earning more per share than NCM this year -- yet it trades at a lower price. Over time, Focus Media should continue to grow its profits at a healthier pace than NCM.
  • Dolby Labs (NYSE: DLB): If you catch the Oscars over the weekend, it shouldn't come as a surprise to find that all of the sound editing and sound mixing nominees relied on Dolby Digital to create their aural playgrounds. Standards may seem like slow growth stories, but Dolby's revenue spiked 23% in its latest quarter. Beyond the big screen, consumer demand for better-sounding gadgetry will only fuel Dolby's future.

Sorry, NCM. I think investors should go to the lobby to grab themselves a treat.

Google and IMAX are Motley Fool Rule Breakers selections. Dolby Laboratories is a Motley Fool Stock Advisor pick. If you're into window shopping, try any of the newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz wonders how many people give NCM's FirstLook a second glance? He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.