Today's tough market may not exactly inspire you to invest. The three major indexes touched bear territory last year. And they haven't yet shifted into that phase of optimism and growth we all are waiting for: a bull market.
This may be getting you down. But there's a way to boost your spirits -- and eventually, your portfolio. That's by considering a stock that's started to show some momentum. I'm talking about one that struggled last year but has been climbing since the beginning of this year. And that stock is entertainment giant Disney (DIS -0.55%). Let's find out more about this supercharged stock to buy now.
A Disney-specific problem
First, a bit of background regarding Disney's losses last year. The stock's 43% drop wasn't just due to general economic pessimism. It actually stems from a problem specific to Disney. And that problem is rising costs linked to the growth of its streaming services.
Disney increased streaming subscribers in the last fiscal year (ended Oct. 1) by almost 57 million to over 235 million. But that fast growth came at a cost. The direct-to-consumer business' operating loss widened to more than $4 billion in the fiscal year, from $1.6 billion a year earlier.
Fast-forward to today. Disney brought back longtime CEO Bob Iger to cut costs and put Disney on the path to growth. Iger's been back in the driver's seat for about three months now and has already started to make progress.
Iger has reorganized the business into three distinct segments: Disney Entertainment, ESPN, and parks, experiences, and products. The idea is that creative leaders can more easily manage their work from creation through finalization -- and take responsibility for their content's financial performance.
Disney plans on $5.5 billion in cost savings across the company and, as part of this, will cut about 7,000 jobs. Most recently, to lower spending, Iger said the company will favor quality over volume when producing films and shows, according to The Hollywood Reporter. Iger also said the company would consider licensing content to increase revenue.
Disney called Iger back for a period of only two years, so it's not surprising he's working quickly to slash costs and jump-start growth.
A big profit driver
Meanwhile, Disney's parks, experiences, and products business continues to be the company's biggest profit driver. That business reported a 25% increase in operating income to more than $3 billion in the most recent quarter.
And right now, quarter to date, attendance levels at Disneyland and Walt Disney World are higher than they were a year ago, and guest spending within the parks also has remained high. Disney's cruise operations are showing growth, too, and the Disney Wish posted positive operating income in its first full quarter on the seas.
The ongoing strength of the parks, experiences, and products business, along with Iger's cost-management efforts, should spur overall growth. Some investors are already betting on this, as we can see from the share price.
Disney stock has climbed 10% so far this year, outperforming the S&P 500.
Still, the stock trades for 23 times forward earnings estimates, down from more than 35 a year ago. At the same time, the parks segment has continued to grow -- and Iger's work promises overall company growth down the road. So the price looks reasonable considering all of this.
And that means this stock may not be supercharged just right now -- it could continue to climb over the long haul. That makes it a great addition to your portfolio. And one that may help you forget about the market slump blues.
