Disney: Pullback Creates Opportunity

08/14/2015 7:00 am EST


Chris Versace

Editor, PowerTrend Bulletin, Growth & Dividend Report, and PowerTrader

This recommended stock is a franchise we all know, and most love, suggests Chris Versace, editor of Growth & Dividend Report.

The Walt Disney Company (DIS) has significant tailwinds at its business over the next few years and, in my view, the pullback in the shares offer very favorable risk:reward trade-offs.

From a business perspective, it is a content company that has several moats around its business.

Many of those are key franchises like Marvel, Star Wars, Frozen, and the Pixar movies, with each of them driving merchandising and park attendance, as well as other products (TV shows, music).

As we look out over the coming months, all of these factors will be coming into play, which is why the shares have been on my watch list for you.

What drove the share drop? Subscriber loss at ESPN, which some are blaming on cord cutters.

Here’s the issue; the two types of content that are not solved sufficiently by other options (like Netflix and Hulu) are news and sports.

Through ESPN, Disney has long-term rights to the NBA, college football playoffs, and other programming.

Remember, too, that Disney has inked an impressive deal with Netflix for its content that includes several new Marvel programs.

As we add DIS shares to our model portfolio, let’s remember that first and foremost Disney is a content company.

My long-term price target on DIS shares is $130. However, based on the slate of content to be had in the back half of 2016, there is upside to that price target.

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