Walt Disney Co. (DIS)

One of his favourite seasonal trades. It is amazing how well this does from around November of each year, right through until around now. Historically, when you get close to this time, you start to see this underperform the market, which is happening again this year. Now is the time to take some good profits.

A very attractive franchise. There has been a little concern around the ESPN with cutting cables, etc. However, over the long-term, it has been very effective at taking money out of parents’ wallets. They have movies, TV, theme parks, tourism operations, etc. The dividend was growing at something like 12.2% per year for 20 years. Dividend yield of 1.4%. (Analysts’ price target is $124.)

They have a problem with ESPN. This is a Mecca in the US, a wonderful franchise. Wait for strength and then pull out. Wait for some fear and get back in.

Still one of the great companies, but you have to look at what is making it great. It could be the theme parks, or maybe the movie production. When looking at the numbers you see that about 44% of revenues come from ABC and ESPN. ESPN is something you have to look very closely at. Is the cord cutting and the deep bundling of network TV going to continue? Last week, they laid off a huge number of people, which tells you something. At the multiple it is trading at, he would probably pass.

A name that he held on for too long, and got stopped out in late August. They were going through the issue with the ESPN, and whether or not they could really integrate some of the big acquisitions they had just made. However, they have done extremely well since election time. World-class properties. Feels ESPN was overdone. He will eventually get back into this.

(Top Pick Nov 9/16, Up 22%) You can’t ever say it is not a great company. She just waited for the stock price opportunity.

One of the greatest franchises on the face of the earth. However, it has been struggling with the decline in the TV business. They own ESPN, and there has been a marginal decline in sports viewership in US football. They’ve had some blockbuster movies. Feels the stock has re-based and will do fine from here on in. However, if it stuck its head up, he would probably sell it.

(A Top Pick May 3/16. Up 11%.) A great company. Struggling with cord cutting in ESPN. Their movie and theme park divisions are doing fantastic. A certain number of consumers will figure out that the cable bundle is actually a good deal. ESPN is also investing in e-gaming which is going to be a huge, huge market in the long-term. This is a very sophisticated distributor of content and he finds it hard to believe that they will not be able to find ways to distribute their sports content through ESPN.

This went through some tough times last year with all the talk about the ESPN and cord cutting that was happening. Since then, it has really started to move upward, and investors are looking beyond that whole cord cutting theme, and looking at how the company is doing very well, particularly in the movie studios with a strong slate of movies coming out. They are also doing well with their parks. They’ve opened the park in Shanghai. He likes this name and thinks it will continue to move forward quite nicely. Trading at about 18 or 19 times earnings with about a 10% growth rate. Not particularly cheap.

(A Top Pick Nov 25/16. Up 12.75%.) The period of seasonal strength for consumer discretionary in general, is October through until April. The best way to play that is through the largest constituent within this space. It has outperformed the market and has done quite well during this time. You want to be looking to take profits on any weakness. Momentum indicators have been negatively diverging from the price, which indicates buying pressure has become exhausted. He would expect a consolidation trading lower, so consider taking your profits here.

ESPN is the big deal on this. It is responsible for about half their profits. People who are selling, are doing so on the belief that the profits are going down. However, if you look at content and what people are willing to watch live, there isn’t much content that they are willing to watch live. He doesn’t see ESPN business declining. He likes the company.

It has been driven by ESPN and cord cutting. It is seasonal and we have just reached the end of its period. If it breaks the current trend, then look to exit.

They own some of the best production studios there are as well a tremendous intellectual library with every old movie in the world. They also have ESPN, which was the major question mark. They have mobilized that. They also have cruise lines and theme parks. This is where millennials are spending their money. (Analysts’ Target: $116.29).

Over the very long-term, there is still further upside in this. ESPN is a very key asset for them, so there have been concerns on cord cutting. Their parks business is very healthy and continuing to grow. Trading at 18X earnings, so it is not cheap. The earnings growth trajectory for the next couple of years has slowed quite a bit. He would wait for a pullback.

It has been stuck in a trading range of $95-$112. The market is very focused on the future of ESPN. Google signed a deal to stream over YouTube. That will be huge. He is okay owning it here.