Walt Disney Co. (DIS)

There is great momentum in the studio, and she sees good things coming over the next year. They can leverage their productions into the theme parks and consumer products. The big catalyst for their theme parks is the opening of Shanghai Disney in June. Up front there are going to be some opening costs, but longer-term it is going to be a great revenue generator. ESPN has been an overhang in terms of subscriber declines, but that is moderating. Dividend yield of 1.43%.

This could be a stock you buy and forget about. One of the best growth companies in the last 40 years. They had their first quarterly miss in 4 years recently. What they do well is cross selling so well. The worries recently were skinny bundles and ESPN. People still want the sports content. It will correct itself. You can now get it at a market multiple.

Down 6% on the earnings they released yesterday. The earnings miss was the 1^st since the 2^nd quarter since 2011. This has been a really consistent profit generator. The problem now is ESPN, which is responsible for the largest chunk of their earnings. ESPN is typically packaged in these large packages of channels in cable networks, and Netflix (NFLX-Q) has kind of changed that. The earnings for ESPN were not as bad as they looked. It was a bad quarter over quarter comparison, because they lost the college games this quarter versus the same quarter last year. He is buying the stock.

Their most recent problem is the great floods in Shanghai, which closed the Disney park there. That will have an impact, but by and large if you are have a 3-5 year view, this is one of the top ways to play the consumer area. Regarding cord cutting, there is a risk from a TV side because of the fracturing of the control of the viewers. This is one of the reasons he does not like telecommunication stocks. Thinks the concern is overdone.

(Market Call Minute.) People concentrate way too much on ESPN. The other businesses are actually growing incredibly well. At these levels, this is a great story.

One of the best franchises in history. They just keep buying more good franchises and doing an outstanding job of developing the projects. ESPN is the big concern right now because of possible cord cutting, but is a brilliantly run program and one thing consumers are prepared to pay for is sports. Dividend yield of 1.37%.

The stock has pulled back on concerns of ESPN and what is going to happen when we have skinny bundles. They have huge programming costs and pricing may come down. She thinks management will be able to work through this. Studio, another division, has great momentum right now with the Star Wars trilogy, and have a good portfolio of acquisitions they have made in that sector. Recently, Jungle Book has been released. They can feed these themes through their theme parks and resorts through their Consumers Products division. Also, Shanghai Disney opens later this year. Trading at a reasonable multiple. Dividend yield of 1.38%.

He really likes consumer discretionary. If the price of energy were to remain low, which it likely does, that is great for developed consumer led markets like the US. This one is right dead centre of travel and leisure, so it is great for that. Their theme parks are doing very, very well and movies are doing well. The thorn in their side is ESPN, which has been a great growth engine for them. Their subscribership is under a bit of pressure. They are likely to get over that. The stock has made a nice turn, and consumer discretionary in the last week has really starting to pick up. He would own this. If it can trade through $105, $106, $107, technically it gets a lot better and would probably add to the position. He has a small position.

There is no better company in terms of monetization content. The consumer products division is a cash cow. They know how to make money through content. In film, they now have the next pipeline. There are very positive catalysts which he likes a lot. The knot here is cable cutting and people going over the top and getting their cable directly streaming. This is tricky, primarily because perception can swing the stock and there is content conflicting data coming out. You have to pay attention to this cord cutting theme. He is neutral on this.

(Market Call Minute) It has been beaten up because of concerns of ESPN and cord cutting, but any time you get a great brand name company where the stock is down, it is probably a good time to buy.

The stock came off yesterday and rebounded a bit today. The Facebook CEO may be a candidate for CEO of DIS-N. Cord cutting has been hurting this stock for the last little while. The likes the stock. If it drops below February lows, then you might want to put in a stop loss at that point.

(A Top Pick April 1/15. Down 6.7%.) Still likes this. It has come under pressure because of worries about unbundling of cable and alternative resources. He is not as negative as the street. They own ESPN which is arguably the best franchise globally on the sports side. Also have wonderful franchises such as Star Wars, Pixar and Marvel that will be generating lots of hits for them in movies, theme parks and merchandise.

A great franchise, in a large part because of their film success with Star Wars. Have done well, but the stock market has punished them, mostly because of the cutting of the cord, cable packaging, and the risk it gives this company in the form of ESPN and ABC. About 45% of revenues come from these 2. There should be some worry on this, as they are losing subscribers. Trading close to 20X earnings. Sold his holdings a while back on those concerns and isn’t really interested in moving back in.

She likes it here now that it has pulled back. It is a good entry point. Concerns about ESPN subscriber growth look manageable. They are seeing good traffic in their theme parks.

Cable cutting is a real phenomenon. To the extent that this company’s revenues are based on cable and pay for television services, they are going to see some pressure. We have already seen it in the stock price. Wouldn’t be interested in owning this.