And the Guru Goes To...

 | Feb 28, 2014 | 4:00 PM EST  | Comments
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This coming weekend is the big one for Hollywood. It is Oscar time, and millions of folks will be watching the Academy Awards to see how their favorite movies and actors have fared.

As you probably know, I do not make predictions, and that applies to movies as well as stocks. But I have to say that I am rooting for Her, because I found the script so original and all too believable regarding our interactions with smartphones in the very near future, and Gravity, because it kept me on the edge of my seat.

There are lots of ways to win in the movie business. You do not have to be a studio with a blockbuster to be successful. Three movie-related companies today earn high grades from my guru strategies that I modeled after the ways great Wall Street investors decide on how to invest their money. Even if your favorite movies do not take home Oscars, you might still come home with your own statuette with these stocks.

Carmike Cinemas (CKEC) is a movie exhibitor with 252 theaters and 2,660 screens in 37 states. It focuses on midsized communities. I wrote about this company several months ago, but it is worth mentioning again, given the attention being paid now to the Oscars and how well the company is performing.

My James O'Shaughnessy-based guru strategy favors Carmike. It likes the company's market cap ($692 million), earnings per share (which have improved in each of the past five years) and its price-to-sales ratio (a measure of how cheap a growth stock is) -- this ratio needs to be below 1.5 and Carmike's is 1.13. The strategy then takes all the stocks that pass the previous three criteria and finds the top 50 stocks based on relative strength (a measure of how well a stock has done in past 52 weeks compared with the market overall).

Carmike's relative strength of 86 places it in this noteworthy top 50.

DirecTV (DTV) brings more than 285 channels of televised entertainment into homes via satellite. It broadcasts movies, sports, television shows and original programming.

Similar to Carmike, this is an O'Shaughnessy favorite. The company has a large market cap ($38 billion), steadily improving earnings per share, and a P/S ratio of 1.20. Further, it is in the top 50 companies that pass these criteria and has a solid 78 relative strength rating.

Time Warner (TWX) owns Warner Bros., HBO and Turner Broadcasting System. Recently announced was a deal to sell Time Warner Cable (TWC) to Comcast (CMCSA). The company is also planning to spin off Time Inc., its magazine business.

My Peter Lynch-based strategy favors Time Warner's yield-adjusted P/E/G ratio (price-to-earnings relative to growth) of 0.78, which is well below the 1.0 maximum allowed. This measures how much the investor is paying for growth, and in Time Warner's case, the current stock price is decidedly favorable to the investor.

No matter who wins Oscars this weekend, these three companies hold star potential. You won't see them walking down the red carpet, but you may well see them bolster your portfolio's performance.

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