Making Two Sales

Frank Curzio

Shares of Imax (IMAX:Nasdaq) are surging more than 10% today to a recent price of $8.07 and we will use the strength to sell 200 shares. This will bring our total position to 700 shares, and it will still make up more than 5% of the total portfolio. On another note, based on recent surveys and earnings from advertising-related companies that suggest a cutback in advertising spending, we will sell 400 shares of Interpublic Group (IPG:NYSE) and change our rating to a Two. Shares were recently trading 2% higher at $7.73.

Imax is trading at a new 52-week high heading into today's release of motion picture "The Dark Knight," which is showing at 94 Imax theaters and expected to be one of the largest openings in box office history. Also, Imax co- Chairman and CEO Richard Gelfond was on CNBC today, highlighting the huge growth plans for the company internationally and in the U.S. -- which is contributing to the strong move in the stock today.

As we've mentioned in past Alerts, we believe the stock has high price-appreciation potential, and the enormous success the CEO discussed today was something we highlighted in our initiation piece months ago when shares were trading at $5. At that time, we said 3D technology was in its infancy and that the stock had the potential for upside. We believe Imax still has that potential, and we're maintaining our Two rating given that shares are up more than 60% since we initiated our position.

Turning to Interpublic Group, the stock is now slightly below where it was trading when we initiated our position. Several reports and conference calls from advertisers that recently reported earnings indicate that companies ranging from small-caps to large-caps are cutting back on their advertising budgets.

We believe that Interpublic has less downside risk than its competitors based on its valuation, but unfortunately, the latest downturn in the economy has many companies scrambling to cut costs. That does not bode well for Interpublic in the short term, and we will look to close out of our remaining position soon.

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