Disney Stock Pops: What Investors Need to Know

Shares of Walt Disney (NYSE: DIS  ) hit an all-time high of $58.22 Monday, and are still rising as of this writing. Just when you thought Disney was becoming too predictable, the media titan threw a surprise twist into the mix. Last week, the company said it would be closing down LucasArts, Lucasfilm's video game division, after Disney acquired Lucasfilm just four months ago for a cool $4 billion. The decision is part of Disney's strategy to transition from game production to a licensing model, according to Bloomberg.

That's not all... Disney is also implementing a cost-cutting initiative that will include layoffs in its studio and consumer products division. Trimming back its expenses should help Disney boost profitability in the quarters ahead. However, with shares of Disney up more than 15% year to date, is it too late for investors to be bullish about the stock's future? Here are a couple reasons why I believe Disney is worth owning into 2014 and beyond.

Big hits on the horizon
Disney's ESPN sports channel continues to be a bright spot for the company. In fact, ESPN makes up about 75% of cable network sales, according to Morningstar. This is particularly impressive considering ESPN is able to successfully increase the amount it charges subscribers. Going forward, this pricing power should help the company offset rising programming costs.

Importantly, Disney remains focused on expanding the reach of its digital content. Earlier this year, Disney reached a multiyear content deal with AT&T that delivers 70 Disney-owned channels to AT&T's U-verse digital network. This and other deals like it will help Disney's content reach more viewers. Together with the strength of its ESPN network and upcoming summer blockbusters, Disney looks poised to continue its rally.

It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney's allure for investors lies in its diversity. The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2351574, ~/Articles/ArticleHandler.aspx, 11/28/2014 11:11:16 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement