Is the Cineworld share price too cheap to ignore? Here’s what I think

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images. The Cineworld (LSE:CINE) share price has taken a battering over the last 12 months. The cinema chain’s woes have deepened further and further since the market crashed back in March. Is CINE’s current share price too cheap to avoid and can it be considered a contrarian buy? For my own portfolio, I think not. Earlier this morning Pfizer reported its Covid-19 vaccine was showing 90% effectiveness. This prompted the market to react and an upturn in activity occurred. The FTSE 100 is up 5% today as I write this. I think this short burst of upward activity will be short lived as Pfizer’s results are reportedly not peer reviewed and there is still a lot more work to be done.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Cineworld a sinking ship?The Cineworld share price jumped 60% today from 28p per share up to 45p. As I write, the shares are trading at 38p per share. In the year to date, CINE has lost over 80% of its share price value. It is currently trading at one of its lowest ever levels recorded.Prior to the economic downturn due to the Covid-19 pandemic, I would have advocated buying Cineworld shares. Between 2015 to 2019, revenue and operating profit were up year on year. If projected financials for 2020 were similar to that of 2019 I would probably rate Cineworld as one of the best bargains out there.2020 has been a year to forget for Cineworld. I believe it may never recover properly. Due to the Covid-19 pandemic, CINE has borrowed heavily from investors just to keep the lights on. In September it raised $250m from private investors which came with a mammoth interest rate of 11%. If you crunch the numbers, that equates to over $27.5m in interest payments a year. This is nearly 15% of 2019’s profit and, based on current market conditions this could be crippling. The numbers suggest to me that Cineworld may not return to former glory any time soon…My verdictEntertainment venues have suffered hugely due to lockdowns and restrictions. Cinemas have been at the forefront of the biggest losers due to the pandemic. At its current cheap price, it could be considered a contrarian buy that will recover. I have a two real concerns with this particular theory when it comes to Cineworld.Firstly, CINE’s debt level is arguably getting out of control. Assuming no further revolving credit facilities (RCF) are extended, Fitch Ratings predict Cineworld could run out of cash before the end of this year. If it does borrow more money, I believe this will hinder any potential recovery and profitability may not return for years to come. Secondly, I do not foresee pent up demand helping Cineworld. Especially not with the plethora of streaming options available to consumers too and consumer’s general nervousness of going back to cinemas due to Covid-19.Like my Foolish colleague Stuart Blair, I won’t be buying Cineworld shares. Instead I will focus my energy and spend my hard-earned money on other stocks. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Simply click below to discover how you can take advantage of this. Enter Your Email Addresscenter_img “This Stock Could Be Like Buying Amazon in 1997” Is the Cineworld share price too cheap to ignore? Here’s what I think Our 6 ‘Best Buys Now’ Shares Jabran Khan has no position in any of the shares mentioned. 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. Jabran Khan | Monday, 9th November, 2020 | More on: CINE See all posts by Jabran Khanlast_img read more