Cineworld’s share price is rising. Should I buy the stock now?

first_img See all posts by Edward Sheldon, CFA Our 6 ‘Best Buys Now’ Shares Image source: Getty Images Edward Sheldon owns shares in Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended Pearson and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Edward Sheldon, CFA | Monday, 1st February, 2021 | More on: CINE “This Stock Could Be Like Buying Amazon in 1997” Simply click below to discover how you can take advantage of this. Like this one… Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Shares in cinema operator Cineworld (LSE: CINE) have had a great run recently. Since the start of November, Cineworld’s share price has risen from 29p to 75p. That represents a gain of around 160% in just three months.Here, I’m going to look at why the company’s share price has surged. I’ll also discuss whether I’d buy the stock for my own portfolio today.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Cineworld’s share price has surgedCineworld shares have risen for two main reasons. Firstly, news that Covid-19 vaccines have been developed has pushed the stock considerably higher. Investors clearly expect the outlook for the company – which has been forced to close the majority of its cinemas due to social distancing restrictions – to improve this year as the world comes out of lockdown. Secondly, the stock has spiked recently as a result of its high level of short interest. On the back of their huge success buying heavily shorted stocks in the US, such as GameStop and AMC, Reddit traders have piled into heavily-shorted stocks in the UK such as Cineworld and Pearson.I imagine some hedge funds have probably also closed their short positions after seeing what has happened in the US to heavily-shorted stocks. This buying activity has pushed Cineworld’s share price up significantly since mid-January.Should I buy CINE shares today?My investment strategy is based on ‘growth’ and ‘quality’. Essentially, I look for companies set to generate strong growth in the long term that are also financially sound. This strategy suits my investment goals and risk tolerance. Obviously, this approach isn’t suitable for everyone. Taking a closer look at Cineworld, the stock doesn’t appear to meet my investing criteria. For a start, I believe Cineworld’s industry looks set to experience structural challenges in the years ahead due to changing consumer habits. Cinema operators face a lot of competition now from the likes of Netflix, Amazon Prime, and Disney. In the future, we could see more movies released direct-to-consumer as well.Of course, Cineworld’s growth should pick up as the world comes out of lockdown. City analysts expect revenue this year to more than double from around $1bn to $2.3n. However, I have concerns about the long-term growth story here.Secondly, I don’t see Cineworld as a high-quality company. Looking at the financials, a few things concern me. One issue is the large amount of debt on the balance sheet. In a recent update, the company advised it now has aggregate gross debt financing of $4.9bn. This large debt pile makes the company more vulnerable.Another issue is the company’s profitability. In the three years before Covid-19, return on capital employed (ROCE) averaged just 7.5%. This tells me that, in the past, the company hasn’t made a large return on its invested capital. All things considered, I don’t see Cineworld as a good stock for my portfolio. I like to invest in companies that are highly profitable and have strong balance sheets. Cineworld doesn’t tick these boxes at the moment. I think there are other stocks I could buy today that have a better chance of being good long-term investments.  Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Cineworld’s share price is rising. Should I buy the stock now?last_img read more

Nine changes for Wales as Gareth Davies retains No 9 shirt

first_img Gareth Davies in action against Uruguay Behind them it’s all change in the second row, with Alun Wyn Jones and Bradley Davies partnered as Luke Charteris drops to the bench. Taulupe Faletau and Dan Lydiate come into the team for James King and Justin Tipuric respectively.Dan Biggar gets the nod ahead of Rhys Priestland, while Jamie Roberts returns to the team in place of Cory Allen, who injured a hamstring after scoring a hat-trick against Uruguay. George North also comes in, replacing Alex Cuthbert on the wing. Warren Gatland brings in nine players for the game against England on Saturday, but retains four-cap Gareth Davies at scrum-half Wales coach Warren Gatland has stuck with scrum-half Gareth Davies for the crunch game against England on Saturday evening, with the experienced Mike Phillips failing to make the bench.Lloyd Williams will be the replacement No 9 and is preferred by Gatland ahead of the 94-cap Phillips, who was called into the squad before the World Cup after Rhys Webb’s injury.While Davies keeps his place from the win over Uruguay on opening weekend, Gatland has made nine changes across the pitch including two in the front row.The vastly experienced Gethin Jenkins comes in for Paul James, while Samson Lee starts on the bench as Tomas Francis replaces the Scarlets man, who was an injury doubt this week.center_img LATEST RUGBY WORLD MAGAZINE SUBSCRIPTION DEALS Wales: Liam Williams; North, S Williams, Roberts, Amos;  Biggar, G Davies; Jenkins, Baldwin, Francis, B Davies, AW Jones, Lydiate, Warburton (capt), Faletau. Replacements: Owens, Jarvis, Lee, Charteris, Tipuric, Lloyd Williams, Priestland, Cuthbert.last_img read more