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Six Reasons Disney Could Be a Fun Ride

By

Keep an aerial view of this company.

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I'm definitely not one of those "Goldilocks" thinkers that believes this is going to be a V- or even a U-shaped recovery, and I'm pretty much equally steadfast in my thinking that the recession will have a formidable and lasting impact on the beliefs and investment habits of most our struggling citizenry.

Nevertheless, I also think that some tried and true companies like Disney (DIS) will ultimately be standing when the dust settles, and therefore deserve a spot on the radar screen. Allow me to explain why I think the legendary company shouldn't be placed on the back burner or passed over without second thought.

Here are some of my latest feelings ahead of the company's first-quarter earnings report, which is due out this Tuesday.

1. It may sound cliché, but I think maintaining a long-term or aerial view is important when pondering Disney or an investment in the company. Although I'm kind of negative about the near-term macro outlook and think that consumers will maintain their spending habits for a while, I believe that the economic picture in US will clear, and that within the next couple of years, families will be visiting theme parks in markedly great volumes and spending much bigger coin on merchandise, movies, and all the rest.

2. The company has been performing quite well, thumping the Street estimates the last three quarters straight. And you can bet your sweet bippy that management is going to look to keep the momentum rolling. Analysts figure the company will earn $0.39 a share in the first quarter, and I think it comes in a couple of cents north of that figure.

3. I firmly believe that ad sales are going to start showing greater signs of life in the not-too-distant future, and that should give its broadcasting business a boost. Keep in mind that its Media Networks business constituted more than 44% of revenues in 2009. In short, when that ball gets rolling, I think the stock will as well.

4. Sure -- there are lots of other theme parks around, and places like Great Wolf Lodge (WOLF) and Cedar Fair (FUN) draw their share of crowds. But let's face it: Nobody does theme parks like Disney, and in my lifetime, I don't think anybody ever will.

5. I'm not excited about the stock because of this, but at the same time, it's hard to overlook. I'm talking, of course, about the dividend -- the forward yield is a tad north of 1%.

6. All told, I think we could easily see this stock in the mid- to high-$30s as soon as bargain-hunters and bottom-fishers realize that things aren't that bad currently and that the future has the potential to be quite good for the California-based company.

Hey, have a great day!
No positions in stocks mentioned.

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