Editor’s Note: This article is a part of our “Top Grad Stocks 2021” series, where our savvy market analysts recommend their best picks for new graduates’ portfolios. Check out “Money Moves for Recent Grads” for more finance advice and click here to see more stocks for your must-buy list.
I have a unique perspective in writing this article, because I have a college graduate in my family this year (that is, after she completes one more project). And if I were to buy one share of stock for her, or any other college graduate, I would choose a share of the Walt Disney Company (NYSE:DIS) stock.
And since many college graduations are the virtual kind these days, I’ll give you some short and sweet graduation platitudes to explain that decision.
Manage Your Risk With DIS Stock
Virtually every major decision you’re going to make in life entails some level of risk. Even the best stock doesn’t always go up. And DIS stock has been no exception.
But over time, Disney continues to reward investors. Many college graduates are around 21 years old. If you had purchased shares of DIS stock on Jan. 7, 2000 and never sold your shares, you are sitting on a share price gain of over 470%. That doesn’t include any dividend gains you may have reinvested over that time.
With a return like that as part of your investment base, it allows you to be aggressive in other areas of your portfolio.
Invest In and Reinvent Yourself
The path a new graduate may choose immediately after college is not likely to be what they will be doing in another 10 or 20 years. Likewise, you don’t have to be a very experienced investor to look at a Disney stock chart and say “Yeah, but Disney hasn’t always been a great growth stock.”
You’re correct. But the company realized a long time ago that it couldn’t get to where it wanted to go through its theme parks alone. As early as the 1990s, the company was making the necessary investment to become one of the dominant names in home entertainment. The college graduates of today don’t know a world without Disney’s Pixar films or the Disney Channel.
The company leveraged that vertical to create The Disney Store that has made it a viable retail name. And most recently, it has launched their own streaming service, Disney+.
Give Yourself Options
Reinventing its core business gives investors another reason to choose Disney as a forever stock. It has multiple ways to generate revenue. During the Covid-19 pandemic, the versatility of Disney was on full display. With the company’s theme parks closed and cruise ships in port, the Disney+ streaming service kept the company relevant and helped stem the bleeding.
And now that Covid-19 restrictions are easing, Disney is predicting a slow (but steady) return of theme park traffic — specifically in the “low double digits.” This will help take some of the edge off (slightly) cooling Disney+ subscriber numbers.
Investing becomes less stressful and more enjoyable when you have performers you can count on despite a downturn in the economy.
Skate Where the Puck Is Going
In hockey terms, defenders are coached not to guard the puck, but to skate where the puck is going. Applying that more broadly, you should make practical choices today with an eye on where you want to be tomorrow.
The House of Mouse may or may not be relevant to your life today. But if and when you have children, Disney will become a part of your life. That will likely mean one — or multiple! — trips to a Disney property. It will almost certainly mean bringing Disney+ into your streaming plans (if it’s not already). And as your life and career matriculates, you may find yourself experiencing the world of Disney in a different way through the eyes of your grandchildren.
In fact, the goal of Disney is to remain relevant at every stage of their customer’s life. And by the looks of DIS stock, they’re doing a pretty good job of that.
DIS Stock Is a Forever Stock
At various times of my life, I’ve held shares of Disney. I’ve sold for different reasons and have always hated to part with them.
Don’t be me. Buy a share or more of Disney today and continue to add more as you go through your life. It’s one investment decision you won’t regret.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.