Staying power is a remarkable thing. Some companies have it. Others don't.
Staying power is dramatically underrated by traders even as it is the lifeblood of long-term shareholders. Increasingly, if you want to make money in a market that's not certain, you have to go with companies that have the wherewithal and the talent to go the distance in a world where trends no longer are adopted glacially. They are adopted with the speed of light.
There's only one problem. On a given day we don't know who is really stuck in a downward spiral or who is just pausing while gathering strength, who is overrun by new forces and who is adapting to them or has the franchises and the balance sheets to withstand them over time.
Let's just use some of today's action to highlight the differences between those who get it or can at least fathom it and those who don't.
Why don't we start with Disney (DIS)? Right now Disney is in the grips of a discussion about the possible falloff of ESPN, a most crucial earnings stream, because of a change in the way people watch television. There are cord cutters, there are people who won't pay up anymore for ESPN, and there are those who simply feel they don't need SportsCenter and other marque programming because they can call up anything on their handheld devices.
At the same time Disney's broadcast numbers weren't strong -- certainly not as strong as its competition, the likes of CBS (CBS) -- and it also closed its Infinity console games business and took a $147 million charge on the unit.
These are all subpar. I am not excusing them.
However, I think they mask a much bigger longer-term picture. First, the company did grow 11% on an earnings-per-share basis even if it missed consensus numbers.
Second, management is running the company for the long term, not the short term. Disney has bought enough studio intellectual property to produce a blockbuster every quarter from now until kingdom come. I know I have been tabbed at times as Reverend Jim Bob, the preacher of the Church of Whatever's Working Now. I have always loved the title because it was bestowed upon me from my now-deceased old friend Mark Haines, the anchorman who brought me to CNBC.
But sometimes the church is wrong because there's so much in the pipe at Disney that you just can't grade it on revenue lost by a broadcast network that can get hot or from subs at ESPN that will, in the end, continue to generate fortunes for years to come. I care about Shanghai Disney, which is about to open, but I care about Mickey Mouse. I care about "Captain America," which I believe will have a huge weekend again, but I care about Snow White. I care about "Frozen" 2, 3 and 4 and "Star Wars" 8, 9 and 10, but also I care about Pirates of the Caribbean and the Jungle Cruise and so many other rides at Disney World and Disneyland that my children's kids will love as much as they did.
I guess it's Reverend Jim Bob from the Church of the Future.
But I can't feel the same about Macy's (M), the department store that reported horrendous earnings this morning and then guided down severely, leaving people to wonder what the future really holds.
I can't think about the Church of the Future here because I can buy pretty much anything I want at Macy's through Amazon (AMZN), often for cheaper. When I moved to Summit, New Jersey, more than 20 years ago, I prided myself that I was less than two miles from the Mall at Short Hills and could pick up what I needed at the blink of an eye.
That's now way too far to shop at Macy's. I know it seems like an institution. But so did Gimbel's when my father sold gabardines, which is a form of pants by the way, and my mom hawked women's lingerie at Lit's. If you were to tell me that either stalwart of downtown Philadelphia would go away, let along Wanamaker's and Strawbridge's, I would have told you that you were out of your mind.
Now you can only Google them to learn who they were.
And that was before Amazon. As pop would always say, there's no God-given right for a store to stay open, and more than 90% of my father's retail clients were wiped out by Wal-Mart (WMT), for heaven's sakes. I remember when one of my father's shirt-store customers -- he sold boxes and bags to retailers -- closed up shop and it really crushed our year. Why did it happen? Because he realized that Wal-Mart was offering the shirts at prices that were below the price he paid the manufacturer. He had no ability to mark-up. Now Macy's has no ability to mark-up because of Amazon, and marking up is the essence of retail.
And I am not even talking about the Staples (SPLS)-Office Depot (ODP) tie-up that got unknotted by a judge last night. The two were trying to combine to fight Amazon. Now they are left to their own devices. One look at either stock tells you exactly what happens in the future. Doomsday.
But now let's compare that to Apple (AAPL), which is part of the Action Alerts PLUS portfolio. Here's a company that has changed a billion peoples' lives. That's about how many people have Apple devices, and given Apple's customer satisfaction numbers, it's safe to say the change is for the positive. We've all altered our behavior because of Apple's cellphones, whether it be because of the need to wear make-up when you go outside because of that high-resolution screen that brings out the unmasked blemishes, the ability to watch Netflix (NFLX) on a iPad Pro because it looks better than TV, the way we pay at the register or how we back-up our myriad photos.
Right now, though, Apple missed a quarter. And like Apple board member Bob Iger, the CEO of Disney, we've decided that Apple CEO Tim Cook has lost his way and there's no innovation. It doesn't matter what's been accomplished or what's in the works -- it's over.
I can't go there. I see the loyalty, the revenue streams including the bountiful service revenue. I also know when I can't see things, namely the products I will kill for but only after I know they exist.
Apple, again like Disney, has got an amazing balance sheet -- best in the world -- and a fantastic buyback and a roadmap for the future. But it's not hot, so it's regarded as a false idol.
Here's a news flash: There's no idol. Just CEOs and businesses, and both Disney and Apple are well-run fabulous businesses.
The analysis can extend to any industry. It wasn't so long ago that the market just couldn't get enough of the oil companies that had the vision to split into exploration and production companies, such as Marathon (MRO) and Conoco (COP), and it shunned the integrates that kept the downstream refining and marketing.
Now the managements at those two companies wonder what the heck they were thinking. Every day they have to pray that the oil glut goes away.
But Exxon Mobil (XOM) and Chevron (CVX)? They are just sitting pretty, printing money downstream as their exploration and production businesses cause problems, but nothing life-threatening. There will come a moment when both companies can buy any assets they want from those companies that are just E&Ps. Not yet. But it will happen.
So blast away at Disney and blow out of Apple. Take profits -- and you might actually have profits -- in Exxon and Chevron. All I know is that they are resting. The others?
If things go extremely well, they might get you back to a better level than now. And if things go awry?
Let's just call them terminated.