There was a little vulnerability among IMAX (Nasdaq: IMAX) shareholders earlier this month, when joint-venture partner AMC pulled back the red curtain on its own beefed-up screen.

AMC's decision to open its first ETX (enhanced theater experience) screen in Disney's (NYSE: DIS) Downtown Disney complex in Florida was a rude awakening for IMAX moat watchers.

After all, AMC has spent the past two years converting roughly 100 of its multiplex screens into IMAX-branded experiences. Why go it alone, unless it was tired of splitting the gate with IMAX after the studios take their generous cuts?

AMC timed the ETX debut perfectly. It was the opening weekend of Disney's Alice in Wonderland. The 24-screen multiplex happens to be part of the Walt Disney World resort, a place with no shortage of mouse-eared buffs. A Disney vacation also isn't a diversion for the thrifty, so paying $14 for an ETX screening in 3-D -- instead of $13 for a conventional 3-D showing or $10 for a flat 2-D experience -- isn't a very taxing decision.

In other words, AMC's decision to introduce ETX in a tourist hotbed may be a sound financial decision, but it will do nothing to verify whether AMC can make it on its own in the suburban shopping centers where most of its screens are located.

Will studios flock to digitally remaster their films the way they do for IMAX? Will AMC ever reach a global network of hundreds of branded screens? Now that Avatar has wowed $218 million worth of IMAX moviegoers, is there really room for exhibitors to consider a box-office-padding premium outside of 3-D and IMAX conversions?

IMAX took a hit after the ETX rollout, but was hitting highs last seen 10 years ago a few days later -- when IMAX reported another blowout quarter.

Fade to black
After three years of stumbling through red ink and single-digit stock prices, IMAX has broken the mold. Revenue in its latest quarter skyrocketed 98% to $54.2 million. The cinematic enhancer delivered a profit of $0.06 a share -- or $0.20 a share on an adjusted basis -- after positing a deficit during the previous year's fourth quarter.

Skeptics will point to Avatar as the workhorse, but they would be missing the point. The film didn't hit the big screen until mid-December. Just $54.2 million of the $218 million in IMAX ticket sales took place during the tail end of the fourth quarter. The real Avatar mother lode will come during the current quarter. And after seeing Avatar forcefully hand over the baton to the IMAX send-up of Alice in Wonderland with aplomb, it's not a stretch to say that News Corp.'s (NYSE: NWS) blockbuster James Cameron flick has whetted moviegoer appetites for more IMAX experiences.

Big screens and bigger value
IMAX's shares may have appreciated sixfold since bottoming out 16 months ago, but this is also a company whose fundamentals improve with every passing quarter. Three months ago, analysts figured that IMAX would earn $0.50 a share this year. Wall Street is now targeting a profit of $0.70 a share this year -- and $0.78 a share come 2011. In short, this is a growth stock trading just shy of 20 times next year's projected net income.

IMAX has installed hundreds of its screens around the planet (digital and otherwise), but one of the real game-changers has been its joint-venture deals with major multiplex operators including AMC and Regal (NYSE: RGC), which will lead to bigger royalties from box-office and concession receipts.

A popular argument against IMAX comes from couch potatoes who have built out their home theater systems. They no longer need to drive out to the multiplex when they can buy the Blu-ray disc a few months later or wait even longer until Netflix (Nasdaq: NFLX) eventually streams more of its catalog to its subscribers.

It's a nice theory, but movie theaters just closed on a record year despite the pesky recession. Premium cinematic experiences are helping to drive exhibitor traffic, as evidenced by the final weekend in January, when IMAX brought in 21% of stateside Avatar ticket sales despite accounting for just 2% of the total screens.

Besides, it's not as if IMAX is turning its back on the homeys. It's in the process of teaming up with Sony (NYSE: SNE) and Discovery (Nasdaq: DISCA) in launching what may be the first 3-D channel later this year -- just as the first 3-D television sets hit the market.

I may have been fashionably early in recommending IMAX to Motley Fool Rule Breakers newsletter subscribers nearly five years ago, when it was in the single digits. It meandered in that pricing range for far too long. However, now that IMAX has broken out -- with its fundamentals improving with every new IMAX installation and every digitally remastered Hollywood blockbuster -- the future couldn't be brighter for the stock, which is more than reasonably priced given its game-altering upside.

There's higher ground ahead, even if one has to go down Alice's rabbit hole to get there.

Is IMAX a buy or not? Share your perspective in the comment box below.

Walt Disney is a Motley Fool Inside Value selection. IMAX is a Motley Fool Rule Breakers recommendation. Walt Disney and Netflix are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't like the way he'd look blown up on an IMAX screen. He owns shares in Disney and Netflix. He 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, and it looks smoking hot on one of those eight-story IMAX screens.