The arrival of September usually means a flurry of activity in the markets. It comes as traders return to their screens after the summer break. On the downside, it also tends to be one of the weakest months for share prices. With interim results due on the 24th, this doesn’t bode well for cinema group Cineworld (LSE: CINE). Cineworld shares are already pretty battered.
Cineworld shares: a horror story
You probably know that 2020 has been something of a horror show for the once-mighty company. It was priced around 220p a pop back in January. But Cineworld shares tumbled 95% to just 21p by March as the coronavirus ravaged the globe and lockdowns were enforced.
Some believe the worst to be over. Broker Peel Hunt, for example, recently slapped a price target of 180p on the stock! But I’m less enthusiastic for now.
True, many of the company’s sites have now reopened. However, there’s still a dearth of new releases. Likely blockbusters (Top Gun 2, James Bond) have had their release dates put back as studios seek to maximise their investment returns.
News that movie-goers must wear masks when visiting is another setback. Why bother with a trip out when you can have a more comfortable experience via Netflix or Amazon Prime at home?
Ominously, Cineworld shares also remain among the most shorted on the London stock market. The only company more hated is Hammerson — the shopping centre owner-manager. When you consider just how much debt the former has on its books, this isn’t surprising.
Yes, any remotely positive comments from management on the company’s outlook next month could see Cineworld shares rally as shorters are ‘squeezed’ and forced to buy back in. With so much working against it right now, however, there are surely far easier ways of making money on the markets.
A better bet…
Cineworld shares aren’t the investment that’s given holders a rollercoaster ride in 2020. Fast-fashion behemoth Boohoo‘s (LSE: BOO) share price has been jumping all over the (online) shop thanks to an odd mixture of soaring sales and negative publicity.
Interim numbers are due on 30 September. I suspect another big move is on the cards. If recent sales momentum has been maintained, this should be in an upwards direction.
Back in June, the company reported “very strong trading and operational performance“. Despite the coronavirus crisis, it now expected to beat previous market expectations for the full-year. What a contrast to the state of affairs at Cineworld!
On the other hand, accusations of poor pay and working conditions in factories supplying clothes to the company have dented BOO’s reputation. An independent review is in progress but it’s clear investors will be looking for an update on what steps it has taken to rectify things. The share price could be punished again if this is deemed insufficient.
As a holder, I’m clearly biased on Boohoo’s prospects. Notwithstanding this, I’d be surprised if recent woes prove anything more than temporary. Similar cases have involved retail titans such as Amazon, Associated British Foods (Primark) and JD Sports. They show that no business is beyond reproach, particularly those with links to the rag trade. They’ve all since recovered.
As long as issues are swiftly rectified, a sustained rise in Boohoo’s price looks far more likely than it is for Cineworld shares.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers owns shares in boohoo group. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Associated British Foods and boohoo group and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 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.