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One More Reason to Buy Disney (NYSE: DIS) Stock

Written by Jason Stutman
Posted May 11, 2018 at 8:00PM

If you haven’t seen the latest Avengers movie yet, I suggest you find some free time this weekend to go check it out. Catch up with an old friend or spend some quality time with family. Heck, see it alone if you really have to.

Even if you’re not a comic book fan, I still highly recommend watching the film — at least from an investor's standpoint. It should help you in appreciating what The Walt Disney Company (NYSE: DIS) is doing with the Marvel Cinematic Universe (MCU) and just how much value there really is there.

I’ll elaborate a bit more on what I mean by that in a moment. But first, let’s consider a few figures...

With international sales taken into account, Avengers: Infinity War now holds the crown for the highest worldwide opening weekend ever. The movie grossed $641 million internationally and $258 million domestically.

Here’s how that stacks up against the competition domestically:

  • Avengers: Infinity War (~$257.70 million)
  • Star Wars: The Force Awakens (~$247.97 million)
  • Star Wars: The Last Jedi (~$220 million)
  • Jurassic World (~$208.81 million)
  • Marvel's The Avengers (~$207.44 million)

Note that four of the five top-grossing openings ever fall under the Disney corporate umbrella. The company has a clear stranglehold on cinematic universes, with the Star Wars and Marvel franchises (among others) under its wing. For some added perspective on Disney’s box office domination, consider this performance summary from Box Office Mojo:

Led by $282.4 million from Avengers: Infinity War after just four days in release, Disney delivered $336.6 million in April, pushing the studio's yearly total to $1.2 billion in the first four months of the year. On April 27, Disney became the fastest studio to reach $1 billion domestically, doing so in just 117 days, besting their previous record set in 2016 by 11 days. From a global perspective, Disney's international gross at the end of April was a massive $1.5 billion for a worldwide total of $2.68 billion. From there the studio surpassed $3 billion in global ticket sales for the calendar year on May 4, reaching that threshold two days faster than the previous record, also set by Disney on May 6, 2016.

Overall, Disney is currently pacing $544.5 million ahead of where they were last year and $315 million ahead of 2016, the year they became the first studio to ever top $3 billion in domestic ticket sales and 2018 has a lot more to offer.

Indeed, Disney still has a lot of movies in the immediate pipeline. Solo: A Star Wars Story is due to release at the end of this month. Pixar's The Incredibles 2 is set to release in June. And Marvels’ Ant-Man and the Wasp is coming in July.

In 2019, the studio will also be releasing Captain Marvel, Dumbo (2019), another Avengers movie, Aladdin (2019), Toy Story 4, The Lion King (2019), Frozen 2, and Star Wars: Episode IX. This is lining up to be a blockbuster year for Disney and its shareholders.

On top of cinema, Disney is pulling its content from third-party streaming as it gears up for a 2019 launch of its own streaming service. There’s enormous potential here for original shows and movies. And Disney CEO Bob Iger has even confirmed at least two Star Wars series on the platform.

Disney’s foray into streaming is an obvious threat to Netflix (NASDAQ: NFLX) and its investors because Disney carries a large, diversified library of content. Marvel, Pixar, ESPN, and Star Wars are surely compelling enough to build a substantial subscriber base on.

Now, I have to admit that I'd been a skeptic of Disney’s stock until fairly recently. I once believed that content was too fickle for an investment. Trends come and go, so it’s risky to take bets on movies and franchises that could prove volatile in nature.

That was my thinking until I saw Infinity Wars. That wasn't because the movie was necessarily a cinematic masterpiece, I’ve actually enjoyed other Marvel films more, but because it highlights how diversified and wide-reaching the MCU has actually become.

Amazingly, more than 40 characters from the MCU appear in Infinity War, including 28 different heroes. Where there was once concern that Robert Downey Jr.’s Iron Man was the one character carrying the MCU, there's now a strong foundation of diversity.

In a way, these characters have become the deities, or Greek myths, of our modern times. Even in a society that’s becoming increasingly religious in the traditional sense, people still need to cling to the supernatural as a way to interpret and make sense of the world around them.

Marvel’s Black Panther navigates attitudes about race relations without alienating anyone in particular. Captain America: Civil War tackles questions of government oversight. And Infinity War addresses the topics of failure, loss, and sacrifice. The same way the Bible and other religious texts use stories to address moral issues, Disney is doing the same with the MCU. And people are eating it up.

This gives Disney some serious power when you think about it. Not only as a developer of entertainment but also as a kind of comic book clergy. It’s not a stretch to say that people follow these storylines religiously: the theater being their church and the concessions counter their altar.

The analogy isn’t perfect, of course, but you get the idea. It’s difficult not to be bullish on a company that owns the trademarks of our modern gods and icons.

Long term, Disney is an easy long hold for more reasons than just this one. Shareholders face some near-term risk as the company battles Comcast for 21st Century Fox assets. But as of today, that deal is looking like it will sway in Disney's favor.

If or when Disney is able to complete that merger, it will become an absolute monster.

The company would gain a controlling stake in Hulu, which would propel it into the streaming business. It would complete its ownership of the Marvel Universe, gaining the rights to the likes of X-Men, Deadpool, and the Fantastic Four franchises. And to top it all off, Disney would gain a host of new content, including the Avatar film franchise, classic shows like The Simpsons, and a massive library of other movies and shows.

And as an investor, there's nothing not to like about that.

Until next time,

  JS Sig

Jason Stutman

follow basic @JasonStutman on Twitter

Jason Stutman is Wealth Daily's senior technology analyst and editor of investment advisory newsletters Technology and Opportunity and The Cutting Edge. His strategy for building winning portfolios is simple: Buy the disruptor, sell the disrupted.

Covering the broad sector of technology and occasionally dabbling in the political sphere, Jason has written hundreds of articles spanning topics from consumer electronics and development stage biotechnology to political forecasting and social commentary.

Outside the office Jason is a lover of science fiction and the outdoors, and an amateur squash player at best. He writes through the lens of a futurist, free market advocate, and fiscal conservative. Jason currently hails from Baltimore, Maryland, with roots in the great state of New York.


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