The impressive performance likely has some investors guessing the stock's impressive streak will pull back soon. But make no mistake: This hardly means Disney stock can't continue climbing from here.
Shorting Disney is a bad idea
If I've learned one thing early in my young career as an investor, it's that winners like Disney tend to keep on winning. So how will Disney do it?
Avengers: Age of Ultron could beat the first Avengers ' debut record this weekend. Credit: Disney
First, remember that Disney has an enviable slate of big-budget movie blockbusters on the way, starting with the domestic launch of Marvel's The Avengers: Age of Ultron this weekend. Though Age of Ultron has already racked up over $255 million in gross receipts from early international releases, Fandango says it's responsible for an incredible 95% of this weekend's total ticket sales in the U.S. so far. It should come as no surprise, then, that preliminary estimates show the action-packed sequel exceeding the first Avengers ' record-setting $207.4 million weekend debut set almost exactly three years ago.
After that, in June, Disney Pixar will unveil its first film since 2013's Monsters University , with Inside Out. Then comes Marvel's Ant-Man in July, followed by another Pixar movie with The Good Dinosaur in November, and, last but not least, the widely anticipated Star Wars: The Force Awakens to close the year in December .
That's only part of its near-term movie slate, too. Down the road, Disney has scheduled two more Avengers films and has big plans for the Star Wars franchise. Toy Story 4 and Pirates of the Caribbean 5 are coming in 2017, and only last month the company announced plans for a Frozen sequel -- and all of these movies are only part of its overall movie business.
Investors should also remember Disney's brilliant propensity for letting the success of its big-screen properties trickle down to profits not only in your living room through its media networks, but also to its consumer products, to its themed attractions at Parks & Resorts -- in which we already know Disney smartly invests billions of dollars each year to maintain pricing power and record attendance -- and to its interactive gaming division, with the Disney Infinity massive multi-player online game.
And yes, there's some risk in that slower-growing media networks still make up over a third of Disney's operating profit. That's especially evident amid worries that traditional media networks could suffer, as the industry shifts to online streaming and more al la carte channel bundles. But all of the aforementioned supplementary growth should only continue to reduce the outsized influence media networks have on Disney's overall results. And even then, if Disney's lucrative deal with DISH Network 's over-the-top Sling TV service is any indication, it should have no problem ensuring that media networks' transition to the future is as profitable as possible.
Finally, remember that Disney regularly aims to return at least 20% of the cash it generates to shareholders in the form of dividends and share repurchases. For investors willing the hold the stock over the long term and let compounding do its work, this approach should only serve to further bolster returns.
In the end, that's why I'm convinced that as long as Disney's entertainment portfolio is so deep, its business so brilliantly organized, and its policies so shareholder friendly, shorting Disney stock is a terrible idea.
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The article Wall Street Doesn't Trust Disney -- Should You? originally appeared on Fool.com.
Steve Symington owns shares of Apple. The Motley Fool recommends Apple and Walt Disney. The Motley Fool owns shares of Apple and Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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