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The Globe and Mail

Cineplex: the feel-good stock of the holiday season

File photo of a Cineplex theatre in North Vancouver.

Jonathan Hayward/The Canadian Press

Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Try it.

Cineplex Inc. operates 161 movie theatres with 1,635 screens across Canada. It also allows users to rent or buy videos online. Its market cap is $2.6-billion.

The company has grown EPS at a 26.7-per-cent pace over the long term (using an average of the 3-, 4-, and 5-year EPS growth rates).

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Cineplex may look pricey, at 27.4 times trailing 12-month EPS, but thanks to its strong growth and 3.4-per-cent dividend yield, it has a solid yield-adjusted P/E-to-growth ratio of 0.91, part of why the Peter Lynch-based model thinks it's still a good value.

Its debt/equity ratio is a reasonable 28.8 per cent, less than half the 64.2-per-cent industry average, which the Lynch- and Martin Zweig-based models like.

Cineplex has solid 13-per-cent return on equity. Its relative strength of 78 over past 12 months shows good momentum. And it has a 43.8-per-cent return on capital, which ranks 40th in the Canadian market, which the Joel Greenblatt-based model likes.

Click here for a complete breakdown of Validea's investing guru report.

Read other research reports here.

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