Key Points
Owning businesses that possess durable competitive advantages is a surefire way to boost the overall quality of your portfolio.
This leading entertainment company, whose shares are cheap, has unmatched intellectual property that rivals can’t replicate.
- 10 stocks we like better than Walt Disney ›
Investors who have a time horizon spanning at least five years should make it a priority to find companies that possess durable competitive advantages. These traits make up their economic moats. And they’re a sign that you’re dealing with a high-quality business.
One such company has seen its shares fall 53% from their peak (as of July 1). Here’s one reason that investors should buy this wide-moat stock right now while it’s on the dip.
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As of this writing, Walt Disney (NYSE: DIS) shares trade at a forward price-to-earnings ratio of just 12.9. This is a notable 40% discount to the S&P 500 index. For a business that possesses unrivaled intellectual property from the likes of Walt Disney Pictures, Marvel, Pixar, and Lucasfilm, this is too good an entry point to pass up.
The market seems concerned about Disney’s legacy assets. This is a valid issue. Cable TV continues to decline. And this presents a headwind pressuring financial performance.
However, the company’s overall profits are rising, thanks to the success of the theme parks and cruises. Additionally, Disney’s direct-to-consumer streaming services, highlighted by Disney+ and Hulu, hold strong positions in the industry.
Management expects adjusted earnings per share to grow 12% this fiscal year, with a double-digit gain in fiscal 2027. And analysts believe that this metric will increase 10% in fiscal 2028.
This tailwind can propel the stock to a winning return.
Should you buy stock in Walt Disney right now?
Before you buy stock in Walt Disney, consider this:
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.