IMAX Corporation (USA) (IMAX): The Canadian Stock Investors Need to Keep an Eye On

However, a complicated legal battle between Cinemark and IMAX is ongoing related to the alleged use of IMAX’s patented technology by the former to make its own XD experience theaters. It is noteworthy that Cinemark poses a significant challenge to IMAX, as the company plans robust expansion. Keeping this in mind, the company recently entered a deal to acquire Rave Cinemas for $240 million, which will enable it to prop up its market share (Cinemax is the third-largest chain in the U.S.)

Additionally, the company plans to invest heavily in the technology segment and develop its XD theaters for an enhanced movie experience. With a focused approach, Cinemark achieved a post tax bottom-line of $170 million for FY 2012 and sufficient funds to invest in newer technology and deeper penetration of the market.

IMAX Corporation (USA) (NYSE:IMAX) finds another competitor in Regal Entertainment, one of the largest theater groups in the U.S. Interestingly, Regal Entertainment is also one of IMAX’s largest customers, as the company is making several efforts in order to bring its own set of large screen movie experience under the RPX brand.

Regal Entertainment, like Cinemark, is actively involved in acquisitions, as it has completed two major deals in the last six months. The company acquired Great Escape Theaters and Hollywood Theaters for a combined value of $330 million, which further consolidates its position as a front-runner in the industry. Given the competitive landscape of the industry, it is paramount for IMAX to focus on maintaining its exclusivity in the technology, which it has developed over the years through continuous radical innovation.

Why invest in this stock?

With no direct competition thus far and consistently rising demand for its superior movie experience from emerging markets such as China, the company looks set for robust growth and a greater share of the global market. IMAX‘s growth potential promises robust earnings and revenue figures, as the top-line is expected to surpass $350 million in FY 2014. The estimated growth during the next few years is expected to be around 35%, as the company continuously scouts for new alliances not just in America, but also in other emerging markets.

The entertainment industry largely stays unaffected by the economic downturn, as people usually turn their discretionary spending from costly affairs such as travelling to a weekend movie.

With robust fundamentals and strong positioning within the entertainment industry, I believe IMAX Corporation (USA) (NYSE:IMAX) is certainly a buy for the long-term.

Ashit Gulati has no position in any stocks mentioned. The Motley Fool recommends Imax. The Motley Fool owns shares of Imax.

The article The Canadian Stock Investors Need to Keep an Eye On originally appeared on Fool.com.

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