Friday, October 3, 2014

Disney: A Wide-Moat Stock To Hold Forever

The Walt Disney Company operates as an entertainment company worldwide. The company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive. The company is not a typical dividend growth stock, although it has paid dividends since 1957, and has never cut them. Disney is the type of company that raises dividends for a few years, then keeps them unchanged, after which it raises them again. Disney is also one of the 60 companies, which could be purchased commission-free using Loyal3, with as little as $10.

Currently, Disney is overvalued at 20.80 times forward earnings and a low yield of 1% . I really like the company, and I believe it has a wide moat. I have hesitated initiating a position in the company for the past 20 points, because of irrelevant factors such as low yield, while ignoring the company's strong competitive position. I would feel more comfortable initiating a position in the company at lower prices, which is why I am going to be monitoring it closely. While the economics and prospects for the business are amazing, I do not like to overpay for even the best businesses, nor do I want to chase share prices higher. I would be most happy to initiate a position below $84 - $85/share. I would be even more ecstatic if I could purchase shares at 15 - 16 times earnings, which is equivalent to a dip below $70/share. This is the type of company to hold forever.

Check the full article over at Seeking Alpha

Full Disclosure: None

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