Disney Rising on Coming Star Wars Profits

U.S. stock markets are rising to end the week, with the Dow Jones Industrial Average (DJINDICES: ^DJI  ) up 0.34% in late trading and within 235 points of another all-time high. Investors are eyeing decent new single-family home sales as a reason to buy broadly today, although even the 6.4% increase in April's seasonally adjusted annual rate of sales isn't convincing everyone the housing market is back. This follows two months of declines, and with interest rates expected to rise there's long-term pressure on home prices and new building.  

Disney in focus
Disney (NYSE: DIS  )  spent billions of dollars adding Pixar, Marvel, and Lucasfilm to its business in hopes of building a stable of long-lasting characters that would power the box office, theme parks, and home theaters. The first two studios have done incredibly well, and now it's time for Lucasfilm's Star Wars franchise to shine.  

Will new characters from Disney and Lucasfilm soon be filling Disney stores?

Star Wars: Episode VII is due out in December 2015, and Disney just announced that it has signed up Godzilla director Gareth Edwards to make a spinoff film scheduled for release in December 2016.

This is similar to the Marvel model, which has individual movies filling the gaps between major blockbusters like The Avengers that tie the series together and sustain moviegoers' attention.

The brilliance of buying these three companies is that Disney will have multiple opportunities for blockbuster films featuring well-known characters every year. Between those, it can introduce new characters -- as in Marvel's upcoming Guardians of the Galaxy, or this Star Wars spinoff -- and keep the storylines that work well.

That box office success then flows down to Disney's theme parks, television networks, DVD sales, and streaming content deals, driving more long-term profit. It's a business model built for long-term success, not something that many movie studios can say in a time of upheaval in the media business.

Will this stock be your next multi-bagger?
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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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9/2/2015 4:36 PM
^DJI $16351.38 Up +293.03 +1.82%
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Walt Disney CAPS Rating: *****