Equity Research and Investment Analysis

Based on our valuation, we would recommend investors not get caught up in the hype over Imax's recent performance, and we are maintaining our Overvalued rating. The company is finally starting to improve fundamentally and strengthen the historically shaky balance sheet, but the market has already awarded the stock with a 277% gain in the last twelve months.

Summer has always been one high time in the movie release cycle, so Imax should benefit from the devoted fans of action flicks like Transformers and the ultra successful Harry Potter franchise. Other major movie releases could help Imax, but there are clearly the two with the most hype and will likely have the biggest impact on Imax's quarter.

Year to date the stock was down about 25%, but it is getting a nice bounce in after hours trading since reporting the impressive results from the first quarter. Dreamworks seems to have found a perfect niche in the film industry with animated movies that the kids love and its entertainment parents can afford, and branching out to 3D and IMAX is keeping their product fresh.

Dark Knight had an amazing weekend at the box office. What is an investors best play to take advantage of this success? Here is a hint: it is not Time Warner the parent of the studio who made it.