1. Walt Disney Co (NYSE:DIS)
Number of Hedge Fund Investors: 92
Jim Cramer was recently asked about the amusement resort company Six Flags. He said he does not like the stock and instead recommended Walt Disney Co (NYSE:DIS) in this theme.
“I actually prefer, I am not kidding, I am not joking around, I actually prefer the stock of Disney,” Cramer added.
Walt Disney Co (NYSE:DIS) bulls believe the turnaround plan of CEO Bob Iger would work, it just needs more time. With interest rates now on the decline along with inflation, the company’s theme park business can see growth as consumers begin to increase spending.
Despite the inflation storm that affected Walt Disney Co (NYSE:DIS) Experiences business, the segment has maintained a stable operating margin of 29% over the first nine months of the year, though this dipped to 26% last quarter.
Walt Disney Co (NYSE:DIS) in Q3 beat estimates and raised its outlook, as the performance was driven by a profitable streaming business. CEO Bob Iger’s leadership, combined with a $60 billion investment in parks and cruises, is expected to drive future growth.
Meridian Hedged Equity Fund stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q2 2024 investor letter:
“The Walt Disney Company (NYSE:DIS) operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company’s stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management’s commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company’s streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.”
While we acknowledge the potential of The Walt Disney Company (NYSE:DIS), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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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