In the Battle Between Marvel and Lucasfilm, Disney Investors Stand to Win

Sometimes a long-term growth investment can seem almost too easy. For me, investing in The Walt Disney Company (NYSE: DIS  ) is as close to a sure thing as an investor can find in today's market. The company is currently the best-positioned media company in the business and is set to unleash a massive wave of new content, the scale of which has likely never been seen before.

Even compared to well-positioned industry stalwarts like Time Warner (NYSE: TWX  ) , Disney remains my top pick in media and one of my best long-term growth ideas in general.

Source: Disney. 

Unrivaled content
The most obvious success Disney is having now is with its Marvel entertainment property. The recently released Captain America: The Winter Soldier opened to an impressive $96.2 million, which set a new record for the month of April, beating Fast Five's 2011 opening of $86.2 million. The sequel has already raked in more money internationally than the original movie did in total. 

Perhaps most impressive is that the Captain America sequel is Marvel's best-performing sequel yet, which means strength in Marvel properties is only increasing. The movie's solid opening represents a 48% improvement upon the original Captain America movie in 2011, which beats Iron Man 3's 36% increase and Thor: The Dark World's 30% increase. 

Marvel is also set to release several new characters to the big screen in 2014 and 2015. Marvel is releasing Guardians of the Galaxy in August of this year. The movie will focus on a group of characters embarking on a journey through the far reaches of space and looks to be unlike anything Marvel has put out so far.

Then in 2015, Paul Rudd will play Ant Man. Of course, the big event will probably end up being 2015's Avengers: Age of Ultron. The first Avengers movie generated a staggering $1.5 billion and remains the most successful movie opening of all time. With Disney continuing to build up the Marvel universe, the sequel will likely end up being an even larger success.

However, also making news for Disney is Star Wars, which recently began shooting. Episode 7, which is a sequel to 1983's Episode 6 set 30 years in the future, will mark the first entry in an entirely new trilogy for the science-fiction series.

Considering the massive box office draws that all of the prior Star Wars movies have been, and the series' noted ability to attract young kids, the franchise could end up being even bigger for Disney than Marvel currently is. The last Star Wars live-action feature release Revenge of the Sith ended up generating approximately $848.7 million worldwide. The only Marvel movies to beat that total so far were The Avengers and Iron Man 3. This indicates the massive power the science-fiction series still has.

Also worth considering is that Lucasfilm has been busy attracting young viewers to the Star Wars universe over the years through the popular animated television show Clone Wars. Although the show is in the process of winding down, with season six having aired in February, the show no doubt added young fans to the Star Wars universe.

The solid positioning is being reflected in the company's growth estimates. On average, analysts expect Disney to grow revenue 6.7% and EPS 19.2% in the fiscal year ending September 2014.

The most likely competition to Disney going forward is Time Warner, which continues to try to strengthen its own superhero division, DC Entertainment. While the company's Batman property has enjoyed great success under Christopher Nolan's direction, the company is now set to combine its signature Batman and Superman properties for a showdown in 2016.

The Batman vs. Superman movie will go head to head with the third Captain America movie on May 6, 2016. Although early results from popular gaming site IGN indicate that viewers will gravitate toward Time Warner's superhero movie first, the recent success of Captain America: The Winter Soldier may cast some doubt on that.

On average, analysts expect Time Warner to experience a 7.8% decline in revenue and only a 4% increase in EPS for the fiscal year ending December 2014.

Source: Disney.

Bottom line
All signs point to continued success for Disney with regard to all things superhero-related. Captain America: The Winter Soldier is just the latest example of Marvel's box office dominance. Additionally, Disney is busy preparing the Star Wars franchise for a late 2015 release, and the megahit franchise could prove to be even more successful than the mighty Marvel.

Going forward, investors in Disney have a lot to be excited about and little reason to consider looking beyond this media company right now.

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  • Report this Comment On April 10, 2014, at 2:03 PM, esxokm wrote:

    I think you are correct about Disney's assets making this an easy stock to own.

    I do also think, however, that Disney has to be careful and not let maximizing-opportunities get away from it.

    It needs to aggressively focus on reducing the costs of selling a blockbuster movie as time goes on. Otherwise, as the corporate culture becomes increasingly excited by its high-profile projects, there may be pressure from within to spend more to open a film on the first weekend (there's already enough pressure from the outside to do this in the form of profit-participant talent and its agents looking for big paydays).

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Philip Saglimbeni

Philip is an avid investor and writer. He contributes to The Motley Fool and Seeking Alpha. You can follow Philip on Twitter @philsags.

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9/2/2015 4:01 PM
DIS $101.89 Up +2.38 +2.39%
Walt Disney CAPS Rating: *****
TWX $70.49 Up +1.05 +1.51%
Time Warner CAPS Rating: ***