Cineplex (TSX:CGX) stock has put together a strong 2021 on the back of renewed optimism for the battered movie theatre industry. Its shares have climbed 46% in 2021 as of close on December 21. However, the stock has dropped 4.2% in the month-over-month period. Today, I want to discuss why I’m looking to snatch up Cineplex stock on the dip before the new year.

The company just scored a huge win in court

Last week, I’d discussed whether investors should buy Cineplex stock after the company scored a big legal win. On December 14, the company was awarded $1.24 billion in damages over a torpedoed deal that would have seen the top Canadian cinema operator acquired by the United Kingdom-based giant Cineworld.

The Ontario Superior Court of Justice ruled that Cineworld “wrongfully repudiated” the proposed $2.18 billion deal. Cineworld was set to acquire the Canadian company just as the pandemic hit and massively disrupted the movie theatre industry. Cineworld’s $54.8 million counterclaim was denied by the court.

This is a big win for Cineplex, which has bled cash since the beginning of the pandemic. The decision will provide the company with some much-needed relief and enable it to turn the chapter on the muffed merger.

Investors should be excited about the December box office performance for Cineplex

The North American box office has bounced back nicely in the final quarter of 2021. October was the best month for movie theatres since the beginning of the year. Better yet, movie releases in November and especially December have kept that momentum going. The next phase of the Disney Marvel vehicles met with solid success so far. Eternals raked in $151 million domestic gross in the month of November. However, the biggest hitter has arrived in December.

Spider-Man: No Way Home is the most highly anticipated Marvel release since Avengers: Endgame, which beat out Avatar as the top grossing movie of all time. The film raked in a whopping $260 million over the December 17-19 weekend. Its performance both wowed and confused experts. This demonstrates the staying power of the Spider-Man franchise, which first hit movie theatres with the Sam Raimi-helmed films in 2002.

Canadian audiences reportedly contributed about 7% to No Way Home’s total North American box office take. That is a solid performance considering Canadian provinces have introduced new restrictions due to the rise of Omicron. However, it also illustrates the missed revenue opportunities for Cineplex. Still, the box office performance shows there is still hunger for cinema experiences in late 2021.

Cineplex may be able to avoid closures in the months ahead

Back in the summer, I’d discussed whether the rising Delta variant posed a risk to Cineplex’s reopening. New restrictions have introduced a 50% capacity limit. Cineplex and its peers will hope that measures do not move beyond that. The movie theatre industry cannot hope to withstand these constant disruptions and remain economically viable in the years ahead.

The post Why I’m Buying Cineplex Stock Before 2022 appeared first on The Motley Fool Canada.

More reading

• Cineplex (TSX:CGX) Stock: Should You Buy Now?
• 3 Heavily Shorted TSX Stocks: Should You Stay Away?
• Canadian Stock Market: 3 Investing Mistakes of 2021
• TSX Today: What to Watch for in Stocks on Thursday, December 16
• Should You Buy Cineplex After its Legal Win?

Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC. and Walt Disney.