Are you looking to invest $5,000? Before you start considering which stocks or assets to buy with those funds, it would be best to make sure you will not need the money for any necessities for several years. Otherwise, if you use money that you might need, you open yourself to the risk of having to sell an investment at an inopportune time.
That being said, if you've got all your bases covered and are looking for a place to invest $5,000 for the next five years, then The Walt Disney Company (DIS -0.15%) could be an excellent choice. The onset of the coronavirus pandemic devastated the company's theme park revenue, but that gave it an opportunity to rapidly grow its streaming services.
Streaming services will fuel revenue growth for Disney
The Walt Disney Company has delighted its customers for decades, creating highly sought after products and services. The House of Mouse generates revenue from several sources: theme parks, box office films, cable TV channels, streaming services, and more. The core of the business is its compelling characters and stories, from Snow White to Iron Man.
What's great about these characters is that they are proprietary. That allows Disney to generate healthy profits because it's difficult to copy. Indeed, before the pandemic onset, Disney's operating profit margin steadily climbed north of 20%.
On the revenue growth side, Disney is developing its streaming services (Disney+, Hulu, ESPN+) to serve worldwide fans. The three have collectively reached 174 million subs as of July 3, and management thinks they can reach over 300 million by 2024. Consumers have spoken, and they prefer to stream content versus watching it through traditional cable or satellite -- mainly because streaming often costs less, can be watched at home and away from home, and can be turned on and off with a few clicks or taps.
It also opens a path for Disney to reach more customers with less friction. It would have been tough for Disney to add 20 million subscribers in a quarter, no matter how good the content was, in the days of strictly cable and satellite services. That level of new customers would require a significant number of professional installations that each take hours to complete, not to mention the necessary equipment.
When it launched Disney+, it was able to add 10 million subscribers in a single day. It is still very early in its development of the streaming segment; investors getting in now can benefit from the years of growth ahead.
Disney's future looks bright
Over the last five years, Disney's stock is up 90%. Keep in mind that this includes the impacts of a global pandemic that caused significant disruptions to its business. It's likely that the next five years will prove more rewarding for investors as the company expands its streaming services internationally, its businesses that were devastated by the pandemic return to full strength, and the company creates more content loved by fans.
Investors buying Disney stock today will probably thank themselves for doing so five years from now.