We recently published a list of the 13 Most Undervalued Blue Chip Stocks To Buy According To Analysts. In this article, we are going to take a look at where The Walt Disney Company (NYSE:DIS) stands against other most undervalued blue chip stocks to buy according to analysts.
“Now is the Time to Revisit Portfolios”
The Fed went through with a 50 basis point cut and as things have started to get clear, investors must give their portfolio another look. On September 20, Matt Stucky, Northwestern Mutual Wealth Management’s chief equities portfolio manager, appeared in an interview on Yahoo Finance to discuss why and how investors must revisit their portfolios.
He suggested that now is the perfect time for investors to sit down and reassess their investments with the help of advisors. Stucky highlights that there is currently $6.3 trillion sitting in money market funds in the asset class, which may not be as attractive after the 50 basis point cut went through. He urged investors to consider a rather diversified portfolio and suggested that sitting on cash alone is risky.
He reiterated that while investors do not need to alter their long-term strategic goals, the ones with idle cash must try to allocate or deploy that money in other investment classes. According to Stucky, garnering a solid yield or return on investment does not come without risk and investors must understand that with the current Fed decision on board, it is impossible to get that kind of yield from cash alone.
What Does the Cut Signal?
On September 19, Dennis Lockhart, Former president of the Federal Reserve Bank of Atlanta, appeared in an interview on Yahoo Finance to discuss the aftermath of the rate cut. According to Lockhart, the rate cut was perfectly balanced and rather optimistic in nature.
He believes that the Fed’s decision was not reactionary to anything going on in the market or the economy. The Fed is particularly confident about the inflation rate, the labor market, and the soft landing of the economy.
Lockhart suggested that the Fed will reroute and remain flexible based on how the economy is performing from meeting to meeting. According to him, the Fed will aim to maintain flexibility and the 50 basis point cut was more like a compensation to what should have happened in July.
Our Methodology
To come up with the 13 most undervalued blue chip stocks to buy according to analysts we examined multiple similar rankings, our own rankings, and ETFs to come up with the best blue chip stocks. We then chose stocks with a forward P/E ratio that was less than the S&P 500’s (22.68, as of September 22). Finally, we ranked the shortlisted stocks in ascending order of the analyst upside potential, as of September 22, 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A packed theater of moviegoers watching a blockbuster film produced by the entertainment company.
The Walt Disney Company (NYSE:DIS)
Forward P/E, as of September 22: 18.9
Analyst Upside Potential, as of September 22: 23%
Number of Hedge Fund Holders: 92
The Walt Disney Company (NYSE:DIS) is a multinational mass media company that ranks fourth on our list of the most undervalued blue chip stocks to buy according to analysts. The business operates across five major segments including media networks, parks and resorts, studio entertainment, consumer products, and interactive media.
In the fiscal third quarter of 2024, the company reported revenue worth $24.5 billion, up 7% year-over-year. While its revenue was partially driven by its world-famous parks, Its domestic parks and cruise chips segment accounted for 60% of operating income.
Additionally, Walt Disney (NYSE:DIS) received countless nominations for its movies and shows and broke records by bagging its 60th Emmy on the 76th Emmy Awards Show. There is no denying that Walt Disney (NYSE:DIS) has a competitive edge. It is home to some of the world’s biggest studios, including Pixar, Marvel, and Lucasfilm, all categorized as intellectual property, making it quite impossible for any rival to copy.
Recently, Walt Disney (NYSE:DIS) signed an agreement with the National Basketball Association, allowing Disney to stream all related NBA events on ESPN’s direct-to-consumer platform launching in 2025. While there may be questions over Disney’s profitability, its direct-to-consumer services like Disney+, Hulu, and ESPN+ are promising, logging their first operating profit in the fiscal third quarter of 2024.
Analysts are bullish on DIS and their 12-month median price target of $115 points to a 23% upside from current levels. 92 hedge funds held positions in the stock at the end of Q2 2024. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $787.9 million.
Mar Vista Investment Partners’ Mar Vista Focus strategy stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q2 2024 investor letter:
“The Walt Disney Company’s (NYSE:DIS) shares declined after its earnings release, even though the company exceeded recently upgraded financial forecasts. While Disney+ and Hulu reached a milestone by turning their first quarterly profit, the company cautioned about theme park attendance returning to pre-pandemic norms. This signals a deceleration following a period of exceptional growth, impacting the stock as theme parks and experiences account for roughly 60% of Disney’s earnings. Despite broader consumer worries, Disney’s stock is still trading with a significant discount to fair value. We expect the gap between Disney’s market price and its intrinsic value to shrink as its streaming division evolves and increases profitability over time.”
Overall, DIS ranks 4th on our list of most undervalued blue chip stocks to buy according to analysts. While we acknowledge the potential of DIS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.