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Welcome to Profit Confidential • Tuesday, May 22, 2012

Disney’s Future Looking Magical

Thursday, January 26th, 2006
By George Leong, B.Comm. for Profit Confidential

I recently visited Disney World, and it looked like the crowds were there. For my family, the number of people sharing the park wasn’t fun, but for the bean counters at Disney, life must be looking good.

 For kids and adults alike, including myself, Disney remains a magical place unlike any other. I love the parades, attractions, and, of course, watching the nightly fireworks at Cinderella’s castle. Chief rival, Universal Studios in Florida, has great rides and attractions for kids, but my son would take Disney hands down over Universal Studios any day. Disney has the magic and experience that you would be hard-pressed to find anywhere else, and that’s just one reason why I love the stock.

 Owned by The Walt Disney Company (NYSE/DIS), the company has an excellent long-term price chart, something that I always like to see, especially for more conservative investors. Companies that display a steady long-term chart are often stocks you want to hold for the long-term. Growth stocks may garner most of the media coverage and dominate the stock chat boards, but long- term, I would chose a great long-term chart over any one-day wonder. A company displaying steady growth over the long-term reflects a sound business model.

 Just take a look at the historical chart of Disney. First traded on January 2, 1962 at the adjusted stock price of $0.14 per share, the stock is up over 18,000% to date. This has easily outperformed the Dow, NASDAQ, and S&P 500 during the time frame. The stock has also split seven times since 1965.

 Now here’s a problem. Since 1998, when Disney was trading at $40, the stock has done very little — in fact, it’s declined 36%. The stock failed to hold at above $40 in 1998 and 2000, and it fell as low as $13.35 on August 13, 2002. That was the bottom for the stock.

 Congratulations if you picked up shares at the low! You see, the stock has been showing some life since late October 2005 — but I think it could be set for a rebound.

 The company was hard hit by the attacks of 9/11, which saw visitors cancel travel plans, including those to Disney’s theme parks. But travel to theme parks has been on the rise of late, and Disney has been benefiting, which may give the stock a much- needed magical boost.

 In an attempt to spread the magic to China, the company opened Disneyland Hong Kong, aimed at exposing Disney and all of its merchandise to the massive Chinese market. Can you imagine 300 million middle class consumers flocking to see Mickey? Disney sure hopes so!

 Disney may now be set for a rebound, and it could finally take a run at $30.

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Profit Confidential AuthorGeorge is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.

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