Sometimes in investing it truly does stand to reason that you should buy what you use. And right now Disney (NYSE:DIS) is a shinning example of this. I’ve said it before, and it bears repeating today, there’s a lot to like about Disney stock.
And off the price chart, analysts at Goldman Sachs agree. According to Goldman, Disney stock is one of five “superstar stocks” to buy now.
The firm’s enthusiasm for DIS and these other companies is based on their ability to dominate their respective industries. In turn, this allows for stronger bargaining power and higher profitability. Not surprisingly, much of what’s supporting Goldman’s view for DIS stock comes from people like you and I who enjoy a whole lot of what Disney offers.
From the entertainment giant’s box-office breaking Avengers: Endgame release this summer, to its dominant theme park business and latest hit attraction Star Wars: Galaxy Edge, to the company’s upcoming Disney+ streaming platform, there’s something for everyone it seems.
Still, Disney’s business wherewithal and our enthusiasm to buy its products and services doesn’t mean buying shares of DIS stock will necessarily be gratifying, let alone in the immediate future. But right now off and on the price chart, Disney is looking like one of those opportune times.
Disney Stock Weekly Chart
It has been a solid year for DIS stock investors. Shares are up 30% compared to the S&P 500’s gains of around 18%. But there’s good reason to see this friendly trend as continuing in 2019’s second half.
As the weekly chart in Disney reflects, after consolidating for more than three years, 2019 has literally and figuratively been a breakout year for Disney stock. If we’re to believe long periods of price congestion like the one in DIS lead to outsized rewards once shares finally break free of those patterns, then shares may only be half way home.
Conservatively, I’d put a price target on my optimism for DIS stock at $175. And with shares now consolidating for the past couple of weeks in a small base on either side of the April all-time-high, there’s sufficient evidence Disney is about to reassert its forceful trend.
For investors agreeable with our outlook, my suggestion is to buy shares above $144. That’s marginally above the mid-June pattern and all-time-high.
To guard against bearish risks, I’d place a stop below $137. This exit is just beneath the current low of the price consolidation. It also keeps risk smartly contained to less than 5%. And in the event we’re right about Disney’s price trajectory, the strategy looks like an even more compelling way to enjoy the ride.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.