Disney and Crocs Both Soar As Dow Stays Flat

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks finished essentially flat today as the low-volume trading week between Christmas and New Year's carried on. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) finished up 26 points, or 0.2%, with the blue chips closing above 16,500 for the first time. Meanwhile, the S&P 500 fell just slightly, declining 0.3 points or 0.02%. In the only significant piece of economic data today, pending home sales grew 0.2% in November, lower than the 2.5% that analysts had forecast, but it was still the first increase in the metric in five months. The recovering housing market has been a major reason stocks have soared this year though rising mortgage rates may cool off the hot real estate market in 2014.

Disney (NYSE: DIS  ) shares led the Dow today, jumping 2.5% to help give the blue chips a win as the company got an upgrade from Guggenheim Partners. The analyst group lifted its rating on the entertainment giant to a "buy" and bumped up its price target to $87, noting "positive momentum" in Disney's recent acquisitions of Marvel, Pixar, and Lucasfilm. This has already been a stellar year for Mickey and Co. as shares have gained about 50% in on the strength of those acquisitions, the supremacy of its ESPN family of networks that provide a crucial barrier against so-called "cord-cutting," and growth in its theme-park business as the economy recovers. Its animated feature Frozen also raked in $28.8 million over the weekend even though it came out in theaters a month ago, showing that its studio division continues to be a hit factory.

Elsewhere, Crocs (NASDAQ: CROX  ) was one of the top-performing stocks of the day, finishing up 21% after getting a boost from Blackstone Group (NYSE: BX  ) . The investment group took a stake in the footwear-maker in the form of a $200 million worth of convertible preferred stock, which it plans to use along with cash on hand to buy back $350 million of stock. In the same announcement, Crocs said its CEO will step down in April, and it lowered its guidance for the fourth quarter, saying it now expects a per-share loss of $0.20-$0.23. Both of those are negative signs, but the market clearly overlooked them in favor of the Blackstone investment, and the proposed share repurchase, which would account for nearly a quarter of the company's market cap. Still, there are plenty of reasons to have concerns about the company's operations, and I'm not convinced that there's a compelling investment thesis, as this is now a slow-growth brand with no competitive advantages.

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