Disney Stock Can Go Even Higher

Mickey Mouse is feeling pretty good these days.

Shares of Disney (NYSE: DIS  ) hit an all-time high this month, and an improving global economy should translate into improving fundamentals at the family entertainment giant.

Analysts see Disney's earnings climbing at a 12% clip this fiscal year, and 13% come fiscal 2014, but that may ultimately prove too conservative. Underestimating the entertainment powerhouse has worked wonders for Disney stock before. It can happen again. 

In this video, Rick looks at how Disney's latest acquisitions -- even though they set the media giant back billions -- will pay off nicely by expanding its addressable market. If the Pixar and ESPN deals seem brilliant in retrospect, the future is even brighter for its more recent deals for Marvel and Lucasfilm.

Disney stock has been a winner before, and the stage is set for some more victory laps in the future.

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, and 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.

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  • Report this Comment On April 19, 2013, at 6:50 AM, esxokm wrote:


    I agree that Disney will go higher. But there are some questions we should think about.

    Is Disney properly maximizing its potential earnings growth? While buying Marvel etc. might be easy decisions for CEO Robert Iger, what about tougher decisions, such as: what to sell.

    As you pointed out, Disney has paid billions of dollars for its acquisitions. The company should therefore sell some assets to offset some of these costs. The company sold Miramax...what about selling the Touchstone library? What about selling ABC Family and buying a cheaper channel? (I say this because I believe some of ABC Family's programming is promised to the previous owner.)

    On the Disney board there was mention of the possibility of selling ESPN; if I remember correctly, the reasoning behind this suggestion was to get ahead of sports-contract-expense inflation and potential resistance to increased subscriber fees. Is this something that should be done?

    What about costs of content generation going forward? Disney paid billions for much will it pay to make these new Star Wars films, and how much will it to pay to market them? If Hollywood sees Disney's stock rise and its movies do very well, won't agents attempt to get more expensive deals for their clients?

    What about the question of what's left to buy? Has Disney's acquisition strategy concluded, or will there be more purchases down the road?

    Quite honestly, I think Disney should stop buying assets and start selling a few. Now is the time to simply work with what it's got.

    I definitely agree with your thesis, but I do worry that the company is not fully evaluating its strategies going forward. I hope the management team doesn't believe it's job is essentially done now that it owns all these character assets.

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