The stock market has been on a downward trend for most of 2022. The coronavirus pandemic has snarled supply chains worldwide, which has helped unleash widespread inflation. In response, central banks have started raising interest rates, typically inversely related to asset prices.
A pent-up demand to get out of the house
Walt Disney was devastated at the pandemic's onset. It relies significantly on bringing large groups of people together to consume its services like theme parks, box office movies, and cruises.
Thankfully, the world is progressing against COVID-19, creating a surge in demand now for the type of away-from-home experiences that Disney offers. Revenue in its segment that includes theme parks more than doubled in its most recent quarter, which ended on April 2. Guest spending was more than 40% above the comparable quarter in 2019. I expect this trend to continue for the next several years as the threat of COVID-19 diminishes.
Meanwhile, Disney has quickly built a robust streaming services segment with over 205 million subscribers and growing. The company is home to some of the most valuable intellectual property likely to drive consumer interest for decades. Hit movies drive revenue at the box office, attract subscribers to streaming services, and boost merchandise sales.
The stock is already trading inexpensively at a price-to-sales ratio of 2.3, the lowest in the last five years if you exclude the crash at the pandemic's onset. If the market brings the share price down further, I will likely add more to my existing position.
Chegg has a substantial competitive advantage
Chegg is an education technology company with a treasure trove of content assets. The company primarily serves college students, providing help with their course curriculum. For less than $20 per month, students get access to Chegg's database of 79 million pieces of content (step-by-step solutions to questions). If Chegg doesn't have the content they are looking for, students get to ask 20 questions per month that Chegg's subject-matter experts will answer. That question-and-answer will become available for all of Chegg's subscribers.
Chegg's revenue has expanded from $254 million to $776 million between 2017 and 2021. That growth has boosted its operating results over that time from a $23 million loss to a $78 million gain. The company faces headwinds in the near term as a robust job market has decreased college enrollment.