There are some companies I want to recommend, but cannot. They are great companies, but none of my guru strategies (automated strategies I created based on the writings of some of Wall Street's greatest investment gurus) are recommending the stock. Usually, a company is out of favor with my guru strategies because its stock price is too high. A high-performing company is not worth an investment if you have to pay too much to buy in.
A great company I have been following for some time, waiting for its stock to fall low enough to earn a recommendation from one of my guru strategies, has just dropped into the land of a good buy. The stock is Disney (DIS) below $94 per share.
It stands alone among media companies; no other is quite like it. Sure, it has traditional media assets, such as the ABC television network and ESPN, the cable sports network (which has the highest affiliate fees per subscriber of any cable channel). But then, it has the Disney name, which places the company in a Magic Kingdom all its own, with film, theme parks, merchandising and even Broadway shows. Plus, it has been an astute buyer of entertainment properties, including Pixar and Marvel.
Most recently, it purchased Lucasfilm, owner of the Star Wars franchise. The reboot of the franchise, Star Wars: The Force Awakens, opened only five weeks ago and is already one of the highest grossing films of all time, worldwide, with a box office take of nearly $1.9 billion.
We all know Disney is a media powerhouse. What excites me now is the stock price is low enough to be a good buy. That is what my Peter Lynch-based strategy says. The strategy focuses on the P/E/G ratio, which is a price-to-earnings relative to growth, and a measure of how much the investor is paying for growth given the current stock price. A P/E/G of up to 1.0 is acceptable, and Disney's yield-adjusted P/E/G is just under the wire at 0.99.
Disney is well priced right now, which is why you should consider buying it now. But hurry, the opportunity to snag this stock at such a good price is typically short lived.