Best Memes Stock: Producers of AMCs or Sundials?
Meme is the theme so far this year, as investors don’t seem to be getting enough of meme stocks. AMC Entertainment (NYSE: AMC) and Producers of sundials (NASDAQ: SNDL) stand out as two of the biggest winners.
AMC stock has absolutely exploded with a gain of over 2,500% since the start of the year. Sundial shares climbed more than 500% in early February. Although the stock of marijuana has declined significantly since then, it is still up over 100% this year.
Which of these two memes titles is the better choice now? Here’s how AMC and Sundial stack up against each other.
Image source: Getty Images.
The case of AMC
Few businesses have been hit as hard by COVID-19 as AMC. The company has closed most of its theaters around the world and its revenues have plunged. AMC has been forced to lay off many of its employees and dramatically cut costs in other ways as well.
However, the worst definitely seems to be in AMC’s rearview mirror. As of March 31, 2021, 99% of its US theaters were open again. Cinephiles return regularly to these cinemas.
The CMA is expected to continue to benefit as more people around the world receive COVID-19 vaccines. CEO Adam Aron said on the company’s first quarter conference call, “I’m closely monitoring these vaccination statistics all the time because, let’s say what it is, vaccination is our way out of it all. .
New movie releases should help as well. For example, Disney plans to launch several probable hits in the coming months, including the latest Marvel movie, Black Widow. Tom Cruise’s 1980s blockbuster sequel Top Gun is also on its way later this year from Paramount, as are several potential audience favorites from other studios.
Meanwhile, AMC has taken advantage of the rise in its share price to raise more liquidity by issuing new shares. The company ended the first quarter with more than $ 1 billion in cash, the highest level in AMC’s 101-year history. AMC appears to be in a strong position to weather the rest of the pandemic.
The case of sundial producers
Sundial Growers also faced its fair share of problems, but not as many as AMC. The company’s cannabis revenues continued to decline in the first quarter of 2020, mainly due to headwinds in the Canadian retail cannabis market.
Like AMC, however, Sundial could have better days in store. The increased availability of COVID-19 vaccines in Canada is expected to help boost the domestic cannabis retail market. Sundial’s management team has also taken steps to improve its fortunes.
In particular, Sundial is now prioritizing the premium cannabis market. The company has invested in increasing the THC content of its cannabis products and achieving more consistent quality levels. These efforts could pay off with higher sales and profit margins.
However, the most ambitious decision of Sundial’s management team is to focus on the investments of the company. Sundial has been busy negotiating and negotiating in recent months, including acquiring cannabis retailer Inner Spirit and buying a stake in a cannabis extraction company. Valens.
Thanks mainly to its investing activities, Sundial even recorded positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter. Expect the company to close even more deals in the not too distant future, potentially in the US market.
Better stock of memes?
The underlying business of AMC and Sundial looks likely to improve this year and into 2022. However, we haven’t talked about stock valuations yet – and there’s a stark contrast on that front.
AMC shares are currently trading at 25 times 12-month sales. This is more than double the multiple of the sale price (P / S) for the sundial. I expect this gap to narrow as the return of moviegoers increases AMC’s revenue. But with Sundial’s earnings likely also on the path to growth, I’m not sure how far the valuations of the two stocks will converge.
Longer term, my view is that Sundial has the greatest opportunity to grow. This is especially the case if the business is able to successfully expand into the US cannabis market.
I think the nod between these memes stocks goes to Sundial, due to its better long-term growth prospects and current valuation advantage. However, I think there are a lot of even better stocks to buy right now that offer more attractive risk / reward propositions than AMC or Sundial.
10 stocks we prefer at Sundial Growers Inc
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Keith Speights owns shares of Walt Disney. The Motley Fool owns shares and recommends Valens GroWorks Corp. and Walt Disney. The Motley Fool recommends Valens GroWorks. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.