Disney Drags Down Dow, But It's Not Time to Panic

Disney's stock is down today, but the long-term investment thesis is still strong.

Jun 20, 2014 at 3:30PM

Disney (NYSE:DIS) is inexplicably the worst performer on the Dow Jones Industrial Average (DJINDICES:^DJI) today, falling 1% against the index's 0.15% gain in late trading.

There aren't any major market drivers today, but I'll note that West Texas Intermediate crude oil is once again up 1% to $107.42 per barrel as the U.S. economy improves and the conflict in Iraq continues. High energy prices could constrain expected economic growth in the second half of the year, particularly if that cost flows down to the gas pump.

Disney is down, not out
Investors may be eyeing those high gas prices as a reason to sell Disney today, but this is a stock long-term investors should love.

Dis Store Image

Disney's consumer goods products are icing on the cake for shareholders.

In the first calendar quarter of the year (Disney's second fiscal quarter), the company reported a 10% jump in revenue and a 30% increase in earnings per share to $1.08. In the past year, the company has earned $3.89 per share and is still gaining momentum in its three-pronged approach to dominating media.

The first key to success is the box office, where Frozen was a massive hit last year; coming up are Guardians of the Galaxy this summer and another Avengers film next year. Add the three remaining sequels to Star Wars and a multitude of spinoffs from both Marvel and Lucasfilm and you have a box office business that is firing on all cylinders.

ESPN and Disney's other television networks provide a steady stream of revenue and earnings, assisted by box office characters. Disney has also adopted streaming platforms more quickly than competitors, including Watch ESPN and Watch ABC apps.

Dis Theme Park Image

Theme parks don't get as much attention as they deserve from investors, but they are Disney's second-largest business.

The beauty of building characters on the big and small screen is that Disney can then translate them into rides, shows, and games at theme parks, which are actually the company's second-largest business. Last quarter, parks and resorts revenue was up 8% -- and that's in a tough economy. Just imagine how Disney's theme parks will do if the economy picks up.

Disney's stock is trading at 21 times trailing earnings, which isn't cheap, but as I've outlined above the three-pronged approach of building successful characters and businesses at the box office, and through media networks, and then translating that to revenue at theme parks has been wildly successful. There's no indication that Disney is losing any steam on the character side, and if that's the case it will drive value down the chain for years to come. Disney's stock isn't doing well today, but this is no reason to panic and may even be a good day to pick up shares to hold for the long term.

Disney is ready for the end of cable
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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