Lions Gate Entertainment Corp. (USA) (LGF), The Walt Disney Company (DIS): The Movie Business Is Risky, But Might Pay Off in the End

The Walt Disney Company (NYSE:DIS) is the most logical long-term investment here, especially for those who have less risk tolerance and/or a shorter time horizon. Studio entertainment only makes up about 14% of Disney’s business, although this will likely increase with the recent acquisition of Lucasfilm and its Star Wars franchise. The rest of Disney’s business is diversified among theme parks, media networks like ABC and ESPN, merchandising, video games, and more.

However, The Walt Disney Company (NYSE:DIS) is a bit expensive right now, trading for more than 20 times earnings, well over their historic average of around 15. Disney does have a great track record of earnings growth, dividend raises, and a good share buyback plan to build shareholder value. They are hands-down the safest and most stable of the three. I would wait for a little pullback from the all-time high that Disney’s shares currently trade for.

The Verdict

If you have low risk tolerance but still want exposure to the movie business, add The Walt Disney Company (NYSE:DIS) to your radar. On the other hand, if you believe the economy will continue to recover for several more years and that people will increase their discretionary spending, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) does offer a much higher potential over the long term, especially if the company can establish a solid track record of profitability.

The article The Movie Business Is Risky, But Might Pay Off in the End originally appeared on Fool.com and is written by Matthew Frankel.

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