Walt Disney Co (DIS) — This household name has become an international entertainment conglomerate with diversified holdings in theme parks, film studios, TV broadcasting, digital media and consumer products.
The company is scheduled to report fiscal 2014 earnings (ended in September) on Nov. 6, and analysts expect EPS to jump 27% to $4.31. For fiscal 2015, they anticipate another 9% increase to $4.70. Their median price target is $95.50.
Disney is set to complete a $6 billion to $8 billion share buyback program for fiscal 2014.
I last covered DIS stock on Sept. 22, with a buy recommendation at $90.49. But the big October sell-off took shares below $80 by mid-month.
The selling appeared to take precedence over the announcement of a contract renewal to carry NBA games on its ESPN and ABC networks through the 2024-25 season.
DIS stock has since recovered, closing Thursday at $90.22, and it is still a fundamentally sound investment. However, despite the solid fundamentals, this is primarily a technical recommendation.
This Dow 30 component participated fully in the mid-October deep “V” reversal/recovery, gaining almost 15% from its low. The correction appears to have ended with a classic selling climax and recovery.
Furthermore, the dramatic reversal reestablished the long-term bull channel with a support low at $86 and high at over $100. On Thursday, shares closed above their 50-day moving average at $88.53 for the third straight day. This sets them up for a punch through their high at $91.20, and finally to a new high and our target of $115.
Buy DIS stock at the market with a stop-loss at $85, which should provide plenty of protection for this volatile Dow leader.