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One of the common themes I’ve wrote about across several sites is the coming blockbuster lineup of films. This includes an abundance of comic book movies, several large action/sci-fi remakes, and a brand new Star Wars trilogy and series of spin-offs. Movie exhibitors are set to see strong growth during the next several years. This is what led to Regal Cinemas (RGC) being added to the portfolio. It is also the reason I continue to hold one of my oldest positons in my own personal account, in Imax Corporation (IMAX). Today, I present a company that is sure to capitalize on the coming film slate and could reward shareholders as the company is undiscovered and trading at a low share price/low market capitalization.

I first stumbled onto Wizard World (WIZD) (Investor Relations Page) while doing research for my write up on newer portfolio holding, Cinedigm (CIDM). Wizard World is the owner and operator of several comic conventions across the country and coming soon in China. The company makes money two main ways with live multimedia (booth and ticket revenue from events) and Sponsorships/advertising. The company is also expanding into other mediums, which we’ll get to later on.

Here is a look at the current lineup of conventions coming under the Wizard World umbrella:

2015:

Jan 9-11 New Orleans, LA
Jan 23-25 Portland, OR
Feb 6-8 Madison, WI (New in 2015)
Feb 13-15 Indianapolis, IN (New in 2015)
Feb 20-22 Cleveland, OH (New in 2015)
Mar 7-8 Chicago, IL (Fan Fest Chicago, New in 2015)
Mar 13-15 Raleigh, NC (New in 2015)
Apr 24-26 Las Vegas, NV (New in 2015)
May 1-3 Minneapolis, MN
May 7-10 Philadelphia, PA

Upcoming:
May 22-24 St. Louis, MO
May 30-Jun 1 Guangzhou (China) (New in 2015)
Jun 12-14 Des Moines, IA (New in 2015)
Jun 19-21 Sacramento, CA
Jun 19-21 Albuquerque, NM (New in 2015)
Jul 31-Aug 2 Richmond, VA
Aug 20-23 Chicago, IL
Sep 4-6 San Jose, CA (New in 2015)
Sep 11-13 Pittsburgh, PA (New in 2015)
Sep 18-20 Columbus, OH
Sep 25-27 Nashville, TN
Oct 2-4 Ft. Lauderdale, FL (New in 2015)
Oct 23-25 Tulsa, OK
Oct 30-31 Austin, TX
Nov 6-8 Louisville, KY
Nov 20-22 Reno, NV

2016

Jan 8-10 New Orleans, LA
Feb 19-21 Portland, OR
Feb 26-28 Cleveland, OH
Mar 4-6 Atlanta, GA
Mar 18-20 Las Vegas, NV
Apr 8-10 Madison, WI
May 6-8 Minneapolis, MN
Jun 2-5 Philadelphia, PA
Jul 15-17 Greenville, SC (New in 2016)

2016 Dates TBA: Indianapolis, Raleigh, San Antonio

Wizard World continues to attract top talent from movies, television, comic companies, and even wrestling to its shows. This creates an extreme demand from fans for tickets, VIP passes, photographs, and autographs. Burt Reynolds recently premiered at his first ever comic con, and it was a Wizard World hosted event. The Wizard World Comic Con is sure to be a hit with wrestling fans with wrestlers The Undertaker, Sting, and Daniel Bryan all appearing. Or consider that Wizard World in small town Des Moines, Iowa has stars like William Shatner, Billy Dee Williams (Lando Calrissian-Star Wars) and Robert Englund (Freddy Kreuger) appearing.

The Wizard World events that have happened to date have been received well, including several new cities. Cleveland saw strong demand that led to the announcing of a 2016 event. This came as the city had snow during the convention and had its coldest February in state history. The event in Madison sold out of its three day passes, sold out Friday’s event, and was a near sell out for Saturday. This strong demand led to the announcing of a 2016 event.

I believe the Wizard World in China will be a huge event for the company and could also could lead to some interest in the company. The company said it has plans to do two to three events in China in 2016 and possibly squeeze one more event in 2015. Competitor Reed Exhibitions (owner of PAX, C2E2, and New York Comic Con) also had a comic con in China this year. Their event was held May 16th and 17th in Shanghai. The recent big news for Wizard World’s China event is the announcement of Coca-Cola (KO) as the title sponsor.

The Chicago Fan Fest was an added event that brought in incremental revenue. The event did have low costs though that lowered the average rate in the quarter. Fans who had bought four day or VIP passes to the Wizard World Chicago (August) event got free admission. For others, day passes were $15 and weekend passes $25.

Comic conventions continue to grow in popularity and have crossed over to include scifi/action movies and tv shows, wrestlers, athletes, and celebrities. For a long time, San Diego Comic Con was the big daddy of them all with attendance of 130,000. That figure is pretty much capped due to spacing worries. Last year, New York Comic Con claims to have had 151,000 fans in attendance to surpass SDCC as number one in the market. While Wizard World doesn’t have either of the top two, Chicago normally comes in third place or close to it. Attendance figures are hard to find for all of the events. The actual term Comic-Con with a hyphen is trademarked and owned by SDCC International.

Wizard World has grown through acquisitions and adding additional locations. The company at one point owned the rights to Big Apple Comic Con and had events there in 2009, 2010, 2011, and 2013. The company does not operate there anymore. Toronto was also once owned by Wizard World. Chicago was another acquisition, which still stands today. The company acquired Chicago Comic Con in 1997 and rebranded it as Wizard World Chicago.

A look at the financials of Wizard World shows the potential of the additional events. For the first quarter of 2015, convention revenue for Wizard World grew to $6.10 million (from $5.17 million). In 2014, the company saw convention revenue rise from $11.19 million to $23.06 million thanks to 16 events, double the number held in 2013. With 25 events being held in 2015, you can quickly see how the revenue should rise in 2015.

During the quarterly call, the company highlighted that some events are more successful than others. The additional events in smaller cities are adding to top line sales, but in some cases are not profitable. Wizard World highlighted that they get profits at Philadelphia, Chicago, New Orleans, Columbus, Portland, Nashville, Austin, Sacramento, Louisville, Minneapolis, San Antonio, Atlanta, Tulsa, Reno, and St. Louis.

In the first quarter convention revenue rose to $6.10 million, as mentioned above. The company saw a gross profit of $1.52 million, a decline from the prior year’s $1.93 million. Income from operations was negative $2.07 million, compared to a loss of $1.22 million last year. The company reported a loss of $0.02 per share, a decline from a profit of $0.01 per share last year. The first quarter had seven events, compared to three last year. This led to higher costs than the prior year. Average revenue per show was $871,633 compared to $1,724,399. This was because of shows in new markets that need time to develop. The average revenue per show should increase throughout the year as some of the mainstays like Chicago, St. Louis, Columbus, and Sacramento are added in.

The two other new ventures from Wizard World are:

CONTV: If you saw my post on Cinedigm you would know that the two companies are 50/50 joint venture partners in this OTT subscription based channel that offers hours of content, including original shows and also a large library of old movies and shows in the comic related genres. Well actually, Wizard World owns 47.5% of CONTV because of other small investors. The channel gives Cinedigm another entry into OTT. For Wizard World, the company is able to reach its core audience and also provide live and in depth looks at its conventions.

Monthly Subscription Boxes: This probably won’t be a huge revenue driver for Wizard World, but definitely bears watching. The company recently entered into the now popular monthly box service, where customers pay a monthly fee to get a box of random items shipped to them. Wizard World did not say how many boxes they were planning to send out, but did announce they sold out of their initial supply in the first six days. Wizard World currently offers a monthly plan at $29.99 and is also working on offering a three month plan, which will likely be cheaper on a monthly basis, but will require the full three month commitment. The three month plan will also come with an exclusive Marvel Secret Wars #1 sketch variant comic. The boxes will be filled with exclusives, collectibles, autographs, and discounts on tickets to shows.

Wizard World has had success upselling its brand by offering VIP passes and exclusive items at its conventions. I believe both of these additional revenue sources show the strength of the brand and ways to create additional recurring revenue for the company and diversification from the conventions.

There are also two other key pieces from an investors viewpoint. The company recently hired Liolis Group as the public relations company for Wizard World. This is big news for the small company as they don’t do as they don’t do a lot of publicity. The stock is therefore unnoticed and underfollowed, which could quickly change. Liolis reps 200 small to mid-cap companies.

Liolis lists several case studies on its website from past successes it has had working PR for small cap companies. This includes:

Rubio’s Restaurant: coverage led to institutional ownership increasing 100%, eventual buyout returned 42% from the time of initial work.

Diedrich Coffee: you may remember this name from being an acquisition target of several companies, the company was eventually bought out with a 500% premium from the time Liolis started working, institutional ownership also increased 70%.

Dreams: this is the one I am most familiar with as it was a sports company I followed and almost invested in, shares eventually gained 125% when Fanatics scooped up the company

While the coverage and publicity from Liolis won’t guarantee a buyout or a sharp increase in the share price, it will certainly bring some attention to the company. If you believe that publicity will highlight the strong fundamentals and growth market Wizard World is in (which I do), then the hiring of Liolis is a huge positive coming soon.

The announcement was also made recently that Wizard World will be presenting at the LD Micro Invitational June 3rd. This will include a presentation from CEO John Macaluso, that I am hoping will be available on the company’s website. Currently, the IR section of Wizard World is heavy on financial reports and no real press releases or presentations.

Keep in mind, investors have limited options in investing in a pure play convention company like this. Reed Exhibitors, the company behind comic cons in New York, and international territories like Paris, is part of RELX Group (RUK) (ENL), which has a market capitalization of more than $15 billion. Compare that to the less than $50 million cap of Wizard World.

Shares of Wizard World were added to the Stocks Under $20 portfolio at a price point of $0.73. Shares have traded between $0.49 and $1.28 over the last fifty two weeks. Shares last saw the $1 mark in September of 2014. Shares saw a nice increase on Friday and appear to be on an upward trend.

Wizard World’ motto is “Where pop culture comes to life”. The company has been successful at bringing fans close to stars and providing huge events around the country. I believe Wizard World will not only bring pop culture to life, but will soon see its shares come to life as well.