Lately, Walt Disney Co (DIS) stock resembles a clunky Millennium Falcon. But for patient investors, there should be an upgrade in the not-too-distant future. After all, it’s fairly rare to get a chance to buy Disney stock when it’s more than 27% off its 52-week high.
A key to the upgrade, of course, is the film pipeline. And we got a nice glimpse of this today, with the release of the teaser trailer for “Rogue One: A Star Wars Story.”
As should be no surprise, DIS pulled this off with its inimitable marketing genius, which the company has honed over the decades. You see, the initial launch was on ABC’s “Good Morning America” (keep in mind that DIS owns the network).
But this is more than just buzz.
For the most part, it looks like Rogue One has lots of potential for becoming yet another mega-hit film for DIS. The premise of the film: Rebel spies go on a mission to snatch the Death Star construction plans.
In fact, it looks like the main rebel is played by Felicity Jones (who received an Oscar nomination for her role in “The Theory of Everything”). An orphan, she has survived on her own since she was a teenager and knows how to take out Stormtroopers with efficiency.
Oh, and in the trailer, she has a pretty good line: “This is a rebellion, isn’t it? I rebel.”
What Can Rogue One Do for Disney Stock?
OK, now in terms of those who want to get a sense of Disney stock with all this, the Rogue One movie could show how DIS might kick start other franchises that are only tangentially related to the main Star Wars saga.
If anything, Rogue One may be a way to cater to a younger generation that’s not particularly interested in the history of the Skywalker family. It also seems like a good bet that there will be plenty of merchandising opportunities with Jones, which should provide a lift to Disney stock.
No doubt, these kinds of films can take in a massive haul at the box office. Consider that “Force Awakens” has racked up about $2.1 billion on a worldwide basis.
As for Rogue One, it does not come out until Dec. 16 this year. But DIS will certainly continue to stoke the interest with trailers. And yes, a year after this, expect Episode VIII of the Star Wars saga to hit the theaters.
Bottom Line for DIS
Again, Disney stock has been mostly a laggard.
Part of this is because of concerns about ESPN. After all, the number of cable subscribers is dwindling because they are “cutting the chord” and moving to online services like Netflix Inc.‘s (NFLX) movie streaming. But there are also concerns about succession. For example, the heir apparent, COO Tom Staggs, unexpectedly announced he would step aside.
Despite all this, DIS stock still has a lot to look forward to — and yes, Wall Street has already done quite a bit to factor in the bad news. Let’s face it — the company has an incredible portfolio of premium content assets, such as Pixar, Marvel and Lucasfilms. And of course, there are the theme parks, consumer products and media and cable assets.
All of these provide tremendous synergy, which helps facilitate sustainable growth in revenues and profits.
In the entertainment world, the company is really a unique platform. Besides, Disney stock is fairly cheap, with the forward price-to-earnings multiple of 15.4. This is in-line with other media operators, such as Twenty-First Century Fox Inc (FOXA) and Time Warner Inc (TWX).
So all in all, this does look like a good entry point for Disney stock, especially in light of the catalysts from potential blockbusters like Rogue One.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
