I had a few childhood “staples”: a game of tag, backyard soccer, bike races, and of course, Disney. These weren’t just a part of my childhood, but my kids’ as well, and probably even their kids’ one day.
We wouldn’t be the first. Walt Disney Co. (NYSE: DIS) has been around since 1923, when it made animated silent films.
The Fortune 500 company rakes in revenue north of $59 billion per year.
That impressive figure is only going to grow, and it’s easy to see how when you look at Disney’s extensive plans for the future.
So this is the perfect time to build a Disney “tradition” of your own – along with wealth you can pass along to your kids and grandkids.
Look – there’s no question this is a stock everyone should be in for the long haul; steady share price appreciation is virtually a given.
But I’m going to show you how you can “play” these shares regularly to make the gains many, many times richer than they would be from just holding the stock…
Turn Disney’s “Fan Club” Meeting into Your Next Double
Disney’s official, international fan club is called “D23” – D for “Disney,” and 23 for the company’s founding year, 1923.
The massive club is known for its biennial exposition, the “D23 Expo.” The D23 is a lot more than just a fan club meeting, though.
The latest expo was last weekend, on Aug. 23-25, in Anaheim, Calif. That’s where the entertainment giant announced a whole slew of new projects. The way I see it, these plans are the key to the next 20 years of “skyrocket”-style growth for this company.
There are the park updates – and I’m not just talking about Disneyland and Disney World. Disney is now the biggest theme park operator in the world, with operations in North America, Europe, and Asia. It operates a fleet of four cruise ships – floating theme parks, really – and at D23, it announced plans for another three.
The worldwide parks and resorts already bring in more than $20.3 billion annually, but the planned Epcot makeover (a little capital expenditure is something I like to see) and the addition of Zootopia and Avengers properties promise to pad that significantly.
Disney is making moves much closer to home, too – everyone’s home. It’s working with mega-retailer Target Corp. (NYSE: TGT) to open in-store “mini shops” in 25 different Target locations to start; plans call for 40 shops altogether over 2020. These outfits will carry 450 items, like toys, clothing, and home goods. Disney did better than $4 billion selling consumer products in 2018, and the team-up with a successful retailer like Target makes good sense.
And then there’s the would-be “Netflix killer”…
I mean the much-anticipated streaming service, Disney+. Media is Disney’s most lucrative operating segment. It already makes eye-watering revenue in media – $24.5 billion last year – and could easily give Netflix Inc. (NASDAQ: NFLX) a strong run for its money.
Disney+ is set to launch on Nov. 12 with a brand-new, streaming-only “Star Wars” space Western series called “The Mandalorian.” There are new films planned from the wildly popular Marvel and Pixar franchises, too.
As you can see, the kid in me is pretty excited.
Here’s why the investor and pattern trader is, too.
How to Play Disney for Outrageous Profits
Disney’s stock is up over 24% year to date, and its upcoming innovations have the potential to move that number even higher.
There’s no question this stock is “pricey” right now, in the sense that you’ll have to shell out more than usual to buy a share. DIS trades at around $137.50 a share; compare that to the average S&P 500 stock price of around $70.
But a little context is needed. That $137.50 is going to look downright cheap in five years’ time. What’s more, Disney trades at 17.3 times earnings, which is actually significantly cheaper than the overall stock market’s 21.8 at the moment.
Even if you can only buy a few shares and dollar-cost average in, do it; your grandkids will thank you.
Besides, I’m going to show you a way to “make up” your principal outlay, whatever that ends up being. After all, $13,750 for 100 shares is a lot more than my standard $500 limit on initial capital.
You do it with a call spread, or what I like to call a “credit loophole trade.”
You buy-to-open a call option at a lower strike price and sell-to-open a call with a higher strike price.
Here’s an example. We made this a day-only order, as in, good for only the day it was placed.
On May 31, 2019, DIS was trading at $130.96. My readers following along with my research recommendation bought a $135 call and sold a $140 call for a net debit of just $1.25.
Then, just six days later, Disney stock rose up to $136.51. So, my readers sold their $135 call and bought their $140 call – for $2.50.
That’s double their entry, double their money.
In under a week, my readers were able to take home a 100% profit, making their trading accounts the real happiest place on Earth. I’d encourage anyone to do the same.
— Tom Gentile
Source: Money Morning