Walt Disney Co. (DIS)

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.

One of the premier media companies globally. The management team is critical on this name. There is speculation that Bob Iger is going to be staying on past 2018. The real challenge has been ESPN. Thinks the worst days are now behind it, and you can trade it up into the $120-$130 level.

(A Top Pick Feb 10/16. Up 22.53%.) A really great, long term holding. The 2^nd largest media company globally, after Google. People are worried about ESPN, but people will pay to see those sports. They are very innovative in terms of distribution.

One of these really good companies that you would love to own, but it is kind of getting a little expensive. He is having trouble justifying the price, even with an aggressive forecast. ROC has been improving. It was about 8% for 10 years in a row, and has climbed steadily, and is now up to 14%. He would prefer to get this one on a pullback.

(A Top Pick Jan 4/16. Up 4.72%.) The market has concerns about ESPN. This is now down to a valuation which is not bad. There is a lot of thought that they may spin ESPN out as a solo entity. Thinks this is still worth holding onto.

A few months ago, every analyst came out and said this company was finished. That was followed by a good quarter where they gave very nice guidance going forward, and that ESPN was not a problem. Now everybody likes the stock again. One of the most fabulously run companies. They have wonderful assets and are very smart guys. Bob Iger will probably retire next year, which will create some problems. You aren’t paying very much for the stock. The company has to make some smart acquisitions going forward to make sure that it is on the right side of the media trend.

The movie studio has really been the driving force, followed by the theme parks and then third by the networks. 44% of revenues come off ABC and ESPN. With talk of cord cutting and smaller bundles as well as a decline on subscriptions to ESPN, he would be very careful here. It has the overhang of half of its revenue coming from a challenged source (Networks). There are better opportunities in the media space.

Following the strength in financials, industrials, energy and technology, in the last 3-4 weeks, consumer discretionary has started to join this rally. He likes the sector. One concern has been subscriber base at ESPN, and he thinks that will continue to be a concern. However, even the media group itself has started to lift. Probably not a bad entry point.

Media is being disintermediated by Internet. The area is under a high flux. He looks at Disney as a content manufacturer, it is interesting, but their ESPN franchise is losing subscribers. Feels it is fully priced. In the long-term, it is probably going to be okay, but it wouldn’t meet his Buy criteria. Dividend yield of 1.5%.

(Market Call Minute.) A great branded company with a lot of good businesses. This is one to own for the long-term, and on any pullback, he would look to buy it.

A wonderful franchise and wonderfully managed. It is made up of 3 basic parts. 1) Media, which is ESPN and ABC. 2) Theme parks which have been run seamlessly and have expanded globally and are very profitable. 3) Film production and the related businesses, which has done very well. The one area of concern he has is their ESPN and ABC franchises, which represents about 45% of their total revenue. It still trades at a reasonably good multiple.

A name he would hold, but would not be buying aggressively. It is a company that is hard to argue with. A fabulous company from a media property standpoint. They’ve struggled a little in the last couple of quarters, largely because of ESPN. Fabulous CEO. Lots of good things about the company, but they had such a big run in 2015 and early 2016 but are now starting to fall down. You need to see a couple of more quarters of putting in above consensus numbers. He would not buy aggressively.

This has had very favourable seasonality. It has actually been higher 40 of the past 50 years between October and April. The average gain is about 23.5%. A large gain and a tremendous frequency of success. The chart shows that the trend of lower highs and lower lows has finally broken. It has broken above its 200-day moving average, which is a good line of support if it can hold. Dividend yield of 1.44%. (Analysts’ price target is $107.35.)

He is pretty positive on it from a franchise point of view. They control their own destiny. The big question is ESPN. They think DIS-N is acting proactive in investment to stream things online.