A Recovering Economy Makes this Retail Trade Likely to Trend Higher

Many industries fared well during the pandemic, but others were essentially closed down entirely. Any in-person entertainment experience was one of them, which nearly led to the bankruptcy of a number of firms.

  • Special: This Company’s Share Price has Increased 1650% Since 2016
  • One such company, AMC Entertainment (AMC), was able to ride a wave of retail investor interest higher. And that higher share price gave the company a second lease on life as they were able to issue new shares to raise cash and pay down debt.

    Now, the company is benefitting from improving box office numbers as consumers head back to the theater. That trend is likely to continue as media companies discontinue offering simultaneous releases of new films on streaming services.

    While shares are already up 1,200 percent off their pandemic-driven lows, a move higher towards profitability could lead to further gains in shares, which are still off their retail-driven highs.

    Action to take: Investors can likely see a decent profit with shares here, especially as shares are in an uptrend. At present, the company is unlikely to reinstate its modest dividend from the pre-covid era, so look elsewhere for income.

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  • Shares have a lot of daily volatility, so traders of options may be in for a wild ride. The March $65 calls, last going for about $6.75, could move in-the-money in the coming months, offering traders high-double to low-triple digit returns.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.