One of the most powerful long-term investment trends is to invest in a company with a durable competitive advantage. For most companies today, that usually means offering a unique product that’s protected by a copyright or patent.
Even though patents are temporary and copyrights won’t last forever, once a brand has been built, it can stand the test of time. And that can lead to higher returns versus investing in generic competitors.
In the world of entertainment brands, it’s tough to argue against The Walt Disney Company (DIS). Yet the company’s most recent earnings disappointed, particularly regarding its total number of streaming subscribers.
But the company’s streaming service is cheaper than peers, and could move higher over time without risking the existing customer base. And the latest earnings showed a big jump in revenues at the company’s theme parks, a key metric in the post-Covid era.
Action to take: Shares are a worthwhile buy in the low $90 range. The stock is about 30 percent off its 52-week highs and the brand remains strong. Shares are fairly valued at about 24 times forward earnings, and the company is on track to bring back its dividend payment for patient shareholders.
For traders, shares will likely trend higher following the recent earnings-related drop. The July $100 calls, last going for about $1.75, offer mid-double-digit returns on a move higher in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.