Why These Companies Are So Attractive

Mitchell Clark: The Walt Disney Company (NYSE:DIS) powered ahead after announcing earnings results that handily beat Wall Street consensus.


The company’s diluted earnings per share increased a substantial 34% from $0.77 to $1.03. Sales for the quarter ended December 28, 2013 grew nine percent to $12.3 billion on a strong performance from studio entertainment and the commercial success of Frozen and Thor: The Dark World.


Once again, the company’s cash position improved materially. Several firms boosted their price targets on the stock and earnings estimates for future periods.


Disney has an uncanny ability to generate growth in an otherwise lackluster environment, illustrating the relative outperformance of media networks, movies, and related consumer products.


The company experienced double-digit comparable growth in studio entertainment, consumer products, and its interactive businesses. This past December, Disney boosted its annual cash dividend by 15% to $0.86 per share. (See “Large-Cap Stocks the Place to Be in 2014?”)


Disney seems to have continued operating momentum on its side, as its theme park business is growing. This division is the second-largest in terms of revenue contribution after media networks.


In terms of blue chips, Disney is not the stock with the highest yield in the marketplace. Its current yield is approximately 1.2%.


It’s not a position worth chasing, but it is worthy of consideration when it’s down or when the stock market is going through periods of poor investor sentiment.


Stocks have been bouncing around, quite trendless since the beginning of the year. Investor sentiment has been shaken by emerging market action and currency movements. Economic data has also been all over the map. Some days, there’s good news; other days, there’s not.


The cold weather is definitely evident in the economic data and the marketplace knows this. There isn’t a lot of reason to expect further capital gains near-term, but there is continued certainty regarding short-term interest rates.


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