Lions Gate Entertainment (LGF)

After Hungar Games their long-term debt should be erased.

Various business units at Lionsgate films ranging from movies and home entertainment to stage plays such as Dirty Dancing appear to be executing well. Moreover, movies such as 3:10 to Yuma, War, Good Luck Chuck and Saw IV helped Lionsgate capture 4 out of the top 8 DVDs sold spots in January.

And, The Saw and Tyler Perry franchises have proved highly successful for Lionsgate with the Saw franchise alone bringing in over half a billion dollars in revenue worldwide. Lionsgate expects to capitalize on the success of Crash by launching a 13 episode mini-series in partnership with Starz.

Lionsgate announced that it expects to report more than $400 million in fourth quarter revenue, well above analyst estimates of $344.3 million. The company also revised upwards its full year revenue estimate to over $1.2 billion

The company expects to increase its cash and cash equivalents to $350 million by the end of fiscal 2008 and is attractively valued with a forward P/S of 0.92 and Price/Free Cash Flow of 10.

Moreover, Lionsgate's balance sheet may not appear very strong on first glance with nearly $600 million in long-term debt. However, almost $269.37 million of that is film obligations and the rest is convertible bonds at a cost of capital of just 3.31%. The company expects interest from its cash position to cover the interest payments on the debt and with closer inspection, the debt does not seem so bad.