Why Buy Disney Shares?

Darth Vader - Hoth

Two words. STAR WARS.

After banking coin this week in Amazon Inc (AMZN) its time to move on.  I did not expect the stock to move that fast and I would rather not lose my weekly profits. That's why I'm turning my focus to Walt Disney Co (DIS).

Disney shares are only $2 away from its 52 week high. I expect the stock to continue to climb and close out the year at $100.  DIS is going to be talked up as a good stock pick for 2015. You know it is.  Why?  STAR WARS.  That's why.

Value investors love Disney, it has a small but respectable 1% annual dividend yield. Year to date the stock is up 18% and that beats the S&P 500 by 8%.  Sure the time to buy would have been when it tanked last month. DIS shares rallied right back and that dip doesn't appear it will happen again. The stock was trading in a nice channel, moving up on a monthly basis despite a touch of volatility.  Besides the theme parks that continue to raise prices and sucker families keep paying up. Disney has some major titles coming in the next two years.  Those titles being Avengers Age of Ultron, Star Wars Ep. 7, Antman, Pixar's Finding Dory, and Captain America 3. Let's not forget that eventually we will get a Frozen 2.  The movie Frozen came out of no where and is the highest grossing animated film of all time.  You fellas like sports? Disney owns ESPN and they get us to watch the commericals. 

disney movie schedule 2015 2016


Mo money indeed.  Big Hero 6 is a success and I'm not even counting that into why I would buy the mouse.  That means massive revenue that will be raked in and cramed down our throat in toys, Happy meals, costumes, video games, and everything else that a logo can be printed on (can you believe it was on toliet paper).  May the poop be with you.

It doesn't matter if the new Star Wars movie is a piece of shit. Fan Boys like myself will be camped out for days and will see the movie with their kids and by themselves 12 times alone.  We will want to see it in IMAX or whatever expensive $20 movie ticket experience.  Disney is going to make billions from future Star Wars movies.  Care to guess how much Ep. 7 will make? If it's good this nerd predicts double what the shitty Phantom Menace did.  That's $2B in ticket sales from the world. That doesn't include the other $1B that they will make from merchandise and whatever else they get us to buy. 

The most recent analyst action on DIS that I agree with 100% is a $105 12 month price target.  I would go $5 higher and say this time next year we see $110 a share.

Oct-31-14 Reiterated FBR Capital Outperform $97 → $105

You can argue that they paid too much for Marvel and LucasFilm. After all Disney purchased Pixar in 2006 for roughly $7.4 billion, Marvel in 2009 for $4 billion, and Lucasfilm in 2012 for $4 billion.  They have to make billions from those films to be profitable.  Think they won't?  Be serious.  Every other person on this planet earth will watch one of these movies.  Take a look at how well the Star Wars films do:

Release Date Movie Production
Budget
Domestic
Opening
Weekend
Domestic
Box Office
Worldwide
Box Office
Trailer
May 25, 1977 Star Wars Ep. IV: A New Hope $11,000,000 $1,554,475 $460,998,007 $797,900,000  
May 21, 1980 Star Wars Ep. V: The Empire Strikes Back $23,000,000 $4,910,483 $290,271,960 $534,171,960  
May 25, 1983 Star Wars Ep. VI: Return of the Jedi $32,500,000 $23,019,618 $309,205,079 $572,700,000  
May 19, 1999 Star Wars Ep. I: The Phantom Menace $115,000,000 $64,810,970 $474,544,677 $1,007,044,677 Play
May 16, 2002 Star Wars Ep. II: Attack of the Clones $115,000,000 $80,027,814 $310,676,740 $656,695,615  
May 19, 2005 Star Wars Ep. III: Revenge of the Sith $115,000,000 $108,435,841 $380,270,577 $848,998,877  
Aug 15, 2008 Star Wars: The Clone Wars $8,500,000 $14,611,273 $35,161,554 $68,161,554  
Dec 18, 2015 Star Wars Ep. VII: The Force Awakens     $0 $0  
Dec 16, 2016 Star Wars: Untitled Standalone Film 1     $0 $0  

mastery bottom line ninjas


Mastery Bottom line: Fellow Masters, Disney is a rare Buy and Hold opportunity.  It will be coveted in various publications, blogs, and talking heads as a stock to own for 2015.  Just like Apple was about this time last year. There's reason to believe it will continue climbing higher thanks to the new Star Wars movie coming next summer.

Disclaimer: No positions in DIS or AMZN at time of publication.