Top Picks 2020: Disney (DIS)

01/23/2020 5:00 am EST

Focus: CONSUMER

Timothy Lutts

Publisher, Cabot Heritage Corporation

Everyone knows Disney (DIS), which is our Top Pick for conservative investors; the blue chip company is famous for its theme parks, movie brands and various media properties, suggests Timothy Lutts, editor of Cabot Stock of the Week.

The stock also offers a dividend of 1.2%. But the real driver of Disney today is the firm’s online properties — and the big attraction today is Disney+, the recently launched streaming platform.

Disney+ contains all of the company’s films (including Pixar, Marvel and Star Wars), myriad TV shows (including The Simpsons and various National Geographic and Disney Channel shows) plus some original content; The Mandalorian, a new Star Wars series, is the most streamed show in the U.S.

Plus, the company controls Hulu and ESPN+, both of which are being offered in a package with Disney+ (just $13 a month for all three).

The stock broke out of a four-year consolidation in the spring when the plans and forecasts for Disney+ were announced, and the stock had a decent run after that. But then it fell into a correction in August and September, falling back to its breakout level and its 40-week moving average.

However, when Disney+ was launched, that brought the buyers back in; the stock rallied seven weeks in a row to new highs before easing into December. I think DIS is a good buy right around here as it gathers strength for its next move higher.

(Editor's note: Tim Lutts' Top Pick for speculative investors in 2019 was Innovative Industrial Properties (IIPR) — a REIT in the cannabis sector. The stock rose 73% last year and he continues to recommend the stock for those seeking relatively low risk exposure to the cannabis industry.)

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