Disney (NYSE:DIS) is performing like a well-oiled machine in 2019. Avengers: Endgame scored one of the highest box office takes of all time and Disney’s films contributed to a third of Hollywood’s entire haul this year. With a few more blockbusters set to release, Disney could have a record year on the silver screen. But it’s not just movies that could impact the price of Disney stock.
Disney’s direct-to-consumer (DTC) streaming options will put the squeeze on its competitors as Disney+ launches with a “who’s who” of established franchises.
Also, with full control over Hulu, Disney has a competitive edge in the streaming space. Then there’s their entire Parks & Resorts division, which DIS is beefing up across the board.
Let’s take a look at the three best reasons to invest in Disney stock today:
Disney+ Will Be Huge for DIS Stock
The direct-to-consumer streaming market is about to consolidate big-time. Consumers looking to un-tether themselves from traditional cable have plenty of options, from services such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) Prime Video to platforms like Roku (NASDAQ:ROKU).
Disney finally unveiled its streaming service, Disney+, which will launch in November 2019. Disney+ is the media giant’s tourniquet to staunch the bleeding of its Media Networks division, which has trended lower due to cord-cutting.
InvestorPlace contributor Luke Lango sees the priority shift to DTC having a huge impact on Disney stock:
“It basically says that Disney can become a huge DTC player without entirely sacrificing its traditional media business. Consequently, as the DTC pivot accelerates for the rest of 2019, investors will turn their attention from cord-cutting losses, to DTC sub adds — and that sentiment shift will push DIS stock higher.”
In the current streaming landscape, competition hasn’t been much of a factor. Netflix, Prime Video, and Hulu can all coexist as consumers load up on subscriptions to watch original content.
While that isn’t going away, the stakes are becoming higher. Consider that Netflix has already begun offloading Disney-owned franchises, such as its original lineup of Marvel shows. As Disney — and other rivals like Comcast (NASDAQ:CMCSA) — hit the gas on their own full-blown streaming services, more of that content will be offloaded from Netflix and other services to live in individual ecosystems.
That’s not a massive concern for Netflix, until you throw in the added bonus of price increases. Consumers love choice but they will become more price conscious and selective when the cost of owning multiple streaming services exceeds the cable bill they seek to cut.
Increased Stake in Hulu and Disney+ Synergies
Despite introducing a new platform to entice cord-cutters now, Disney is no stranger to streaming media. The House of Mouse already runs Disney Life in the U.K., has ESPN+ for its sports content and owns the lion’s share of Hulu. With majority ownership, we’re going to see a one-two punch from Disney+ and Hulu in terms of original programming.
And Disney has established brands out the wazoo.
Hulu already has a massive installed base, too, so it’s not starting from scratch. With so much content across several platforms, there’s no shortage of ways Disney can create synergies, including a Disney+ bundle.
Disney’s New Theme Parks
We can’t forget about Disney’s amusement parks, which bring in more than 40% of the company’s revenues. Last year, Disney began pouring cash into its parks and resorts to give its six theme park resorts a major facelift. In fact, the company spent more money building out its current attractions than it was spending on Marvel, Pixar and Lucasfilm together.
Recently, Disney launched Star Wars: Galaxy’s Edge at Disneyland, and will launch Galaxy’s Edge at Disney World later this summer. Expect this and Disney’s other expansions to supercharge Disney’s already-booming parks business.
In an article from February 2019, InvestorPlace writer Bret Kenwell spells out the bull thesis for DIS:
“But a strong economy translates to more than just park sales. It means more little kids dressing up as Avengers and Elsa from Frozen for Halloween. It means more toy sales — which also benefits Disney’s partner Hasbro (NASDAQ:HAS) — around the holidays and more outings to the theater. No matter how you slice it, a strong economy is good for Disney.”
Bottom Line for DIS Stock
So far in 2019, DIS stock is up nearly 32%. Despite these gains, DIS trades at a relatively muted 15.8x earnings. I wouldn’t hesitate to scoop shares of Disney here, and I definitely would not freeze at the notion of buying DIS stock at a discount if and when it pulls back. This is a stock you’ll want to buy and hold for the long-term.
John Kilhefner is the Managing Editor of InvestorPlace.com. As of this writing, Kilhefner did not hold a position in any of the aforementioned securities. If you have questions about the site or suggestions about our content, email us at firstname.lastname@example.org. Want to pitch us an article? Send your ideas and tips to email@example.com, and if we like it, you’ll hear back from us!