However, you may say, “Man this is too much.” Fellow CAPS investor, MightyMinnow would agree with you and had this to say about The Walt Disney Company (NYSE:DIS) on March 10:
“America is over entertained. This is where the tax hikes and low wages will hurt.”
In 2013 alone, you will see at least two major films based on Marvel characters–Iron Man 3 and Thor: The Dark World. Upon Walt Disney’s announcement of its acquisition of Lucasfilm it said that it plans to roll out a new series of Star Wars films, television shows and merchandise. This could lead the long-term investor to worry about sci-fi market saturation.
Right now, however, customers seem to love Disney’s products. In its most recent quarter its revenue increased 10%, very impressive for a large cap company such as Disney.
Consumers give luxuries such as movies and theme parks a low priority if they see a decrease in their paychecks. A long-term investor needs to remain watchful of these types of trends when studying Walt Disney.
Will this beverage king get assassinated?
The Coca-Cola Company (NYSE:KO)’s trademark red and white represents one of the most recognizable brand names in the world. Its vast distribution system allows the company to efficiently manufacture and distribute its products throughout the world. This company represents the bluest of the blue chips and should be in any investor’s portfolio. Right?
However, on April 9, All Star Caps investor elkwingcaddis submitted the following bearish statement:
“Near its 5 year high. I would expect to see some sales drop as Sodastream (NASDAQ:SODA) picks up market share. I bought a Sodastream and have been using it every day and have not had Coke in my house since.”
Consumers gravitate toward Sodastream International Ltd (NASDAQ:SODA)’s environmentally friendly story. Fewer bottles get thrown into the landfill as Sodastream International Ltd (NASDAQ:SODA) users utilize reusable bottles to make their sodas. Contrast with Coke bottles that get thrown away every time someone finishes its contents.
Moreover, after reaching a breakeven point for the machine, SodaStream customers can see incremental savings as the syrup represents a lower cost per ounce than the pre-bottled Coke products.
SodaStream’s fundamentals demonstrate continued growth. In its most recent quarter, SodaStream’s revenue increased 34%. Conversely, The Coca-Cola Company (NYSE:KO)’s revenue decreased 1% in its most recent quarter.
The Coca-Cola Company (NYSE:KO)’s size could serve as a hindrance to any future robust growth. Small companies such as SodaStream could eat into The Coca-Cola Company (NYSE:KO)’s market position. Finally, health and environmental awareness could dampen consumer desire for The Coca-Cola Company (NYSE:KO)’s traditional prepackaged sodas.
The Foolish takeaway
When you are convinced of a company’s investment’s merit always search for articles that disagree with your sentiment. Looking at bearish comments at the Motley Fool CAPS community represents another way you can do that. This will lay the foundation for a possible sell thesis in the future should the need arise and take your hard-earned investment capital elsewhere.
The article The Importance of Dispelling Confirmation Bias originally appeared on Fool.com.
William Bias owns shares of McDonald’s, Coca-Cola, and Walt Disney. The Motley Fool recommends Coca-Cola, McDonald’s, SodaStream, and Walt Disney. The Motley Fool owns shares of McDonald’s, SodaStream, and Walt Disney. William is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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