The search for value is never-ending for investors, and is one which is fraught with the potential for value trap-related pitfalls and a never ending "averaging down" scenario in which more and more shares of a company are acquired at ever-decreasing prices, resulting in a loss which may ultimately sink a portfolio over time.
Such is the case when picking value stocks; in holding too firm to one’s beliefs in a business, one can be burned by poor operating results quarter after quarter, or one can be rewarded by the market with significantly higher returns than the average investor due to the market realizing the company’s true underlying potential.
Today, I find that one company which fits well into the second bucket of firms is Walt Disney Co. (NYSE:DIS). Disney is one of the few truly iconic brands available to investors seeking growth, and is a company which has continued to churn out fantastic earnings results each and every quarter, in spite of investor backlash over the company’s media assets.
With headlines often focusing on the negative aspects of owning incredible franchises such as ESPN, I would like to take the time to reiterate how valuable the company’s asset base is both in terms of absolute value (it has been estimated that ESPN is worth more than $50 billion as of a few years ago), as well as incremental profitability (nearly $5 billion per year in operating margin is provided by the company’s media assets).
Disney’s new theme parks, and specifically the newly-opened park in Shanghai, China, will continue to drive profitability to "forever and beyond." In my mind, right now is an incredible time for investors, from the standpoint of being able to pick up shares of one of the world’s best companies at a discount – don’t dilly dally too long!
Invest Wisely, my friends.
