Some say that The Walt Disney Company (NYSE:DIS) is a $115 million behemoth media company that already has its best years behind it. I’d say the best is yet to come. Even as it stands right now, the company is on a roll. Year to date, it is already up about 28%. But that is not even the half of it. The Walt Disney Company (NYSE:DIS) is what I would refer to as a “long-haul” stock for reasons I will outline below.
Heroic gains
Movie franchises nowadays are pulling in some serious cash with record-breaking releases. With this cash comes serious potential to drive up stock values.
The Walt Disney Company (NYSE:DIS) bought Marvel comics for $4 billion in 2009, which looking back, was a brilliant investment. Marvel represents a portfolio of popular American characters with heroic themes going back over 40 years. We are talking Captain America, Thor, X-men, Spider-man, Iron Man and a host of other readily acknowledged names with long lives in American public consciousness.
This truly is the stuff of childhood fantasies, made real. It’s easy to see why, since the acquisition, and with The Walt Disney Company (NYSE:DIS)’s marketing and cash muscle behind it, the stock has gone up 128% (25.6% annualized!) since its first Marvel release in 2008.
Iron Man is arguably the star of the show, and Robert Downey Jr. does a quite talented rendition of the billionaire industrialist Tony Stark. He even looks dead-on like him. The first Iron Man movie grossed $585 million (worldwide), the second, $623 million.
Now Robert Downey Jr. has worked his magic yet again, with a blowout Iron Man 3 release opening weekend total of $175 million. He just did a deal for two more movies. Can you say cha-ching?
The Avengers, its biggest and most ambitious Marvel film to date, incorporating all of its major characters, grossed $200 million in its opening weekend. That tally rises to over $1 billion in total earnings when accounting for international sales. The stock, predictably and immediately, got a nice bump.
I haven’t even mentioned the company’s other franchises (which it is also making movies and sequels for) and how insanely profitable they could be. Thor’s $449 million at the box office is nothing to sneeze at, and the company has plenty more in its lineup, including Thor 2 coming out later this year.
Captain America, ironically, does less well in the United States versus overseas. The first movie made $368 million, not as good as Iron Man or Thor but the company almost tripled its investment of $140 million.
Bottom line, as long as the company sticks to its current formula, and it looks like it is holding pretty steady, this stock has nowhere to go but up.
Franchise wars
Direct competitors Time Warner Inc (NYSE:TWX) and Twenty-First Century Fox Inc (NASDAQ:FOXA) also have a few aces up their sleeves in the movie business.
Time Warner Inc (NYSE:TWX) has had a relatively good last few years where movie franchises are concerned. It actually owns DC Comics, which includes both Batman and Superman. To say its most recent incarnation of the Batman franchise has been a tremendous success would almost be an understatement. All three movies, directed by Christopher Nolan, have returned over $1 billion at the box office combined.
Its latest Superman flick did fairly well and it is rumored to be a making a Batman/Superman movie, a bit like Marvel’s Avengers. If it is anything as good as the Avengers, the year of its release will be a great year for Time Warner Inc (NYSE:TWX).
