Don't Sell Your Disney Stock, Buy More!

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Over the last year Disney (NYSE: DIS) has had quite the run up. The beloved media company has posted gains in excess of 30-percent over the past year and I don’t see it stopping there. So how could this behemoth of a media company possibly be worth any more than it currently is now? I took a look and I can think of a variety of reasons.

ESPN

You probably knew I’d start with ESPN, who wouldn’t? This international sports brand sits atop the Disney Empire and it continues to grow. Subscriber fees for the brand are growing every year, as are the number of people paying those fees. With the price of ads going up on the network too, I think ESPN has a lot of room to run upwards.

Of course, competition could come along. Comcast (NASDAQ: CMCSA) is already trying to mount the pressure with their competitor NBC Sports. NBC Sports could one day become a valid competitor but I don’t think it’ll be easy to take ESPN down without a fight. 

ABC Family, Disney Channel and Other Cable

ESPN might be the king of cable, but Disney also has a lot of other brands duking it out with the competition while continuing to increase subscriber fees. Channels such as ABC Family and the Disney Channel are staples in a household of minors and they will likely continue to be.

These channels as well as other cable networks that Disney either owns or has share in continue to expand their viewership which leads to expanding advertising and a bigger bottom line for the company.

Parks and Resorts           

Going to a Disney theme park is the ultimate family vacation. Unfortunately, due to the financial crisis, many families were left without this opportunity. Despite this, Disney didn’t end up going bankrupt, they kept on going and I foresee revenues at parks and the resorts surrounding them increasing throughout 2013.

If the seventy-plus-million guests that make their way into Disney parks every year have more money to spend then more money will surely flow to the holders of Disney stock.

Movies

The movies, Marvel, LucasFilm, need I say more. When Disney bought Marvel I doubt anyone could see a billion dollar box office movie coming just a few short years down the road, Disney pulled it off though this summer with The Avengers. Even now that The Avengers has been and gone I don’t see the Marvel brand diminishing in any way, I actually think it will continue its incredible growth.

Now, let’s take a look at LucasFilm, another Disney purchase that brings with it some incredible brands. Disney has so much potential with the Star Wars series and they will likely make the big bucks at the box office despite fan outcry about the purchase.

Everything Else

I only outlined some of the ‘biggies.’ There are many more reasons why Disney will continue to grow for years to come. You have all of the local ABC networks that bring in ad money, all of the merchandising that Mickey Mouse, Captain America, and Yoda will sell and even the Pixar movies.

This is a great, feel-good company to own!

The Numbers

With growth in all of the aforementioned divisions I don’t think it would be out of this realm for Disney to cross the $100 billion market cap mark by 2014. Doing so would give us around a 15% gain leaving a per share price of somewhere around $56-57.

Disney also has a dividend that keeps increasing! The dividend is paid annually so you’ll have to wait till next year if you wish to collect it. Currently the per share dividend is $0.75 giving us an approximate 1.5% yield. Over the last 3 years that dividend has jumped from 35 cents to the current 75 cents, with further gains likely in the future! 


Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services recommend Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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