The trend is likely to continue as most of its client industries, such as foodservice, hospitality, energy and healthcare are expanding as the economy improves; this is a company that continually improves its processes and identifies new markets to tap into.
The Magic Kingdom
With a soaring stock price, up 24% in the first six months of 2013, The Walt Disney Company (NYSE:DIS) was hitting on all cylinders until the release of its latest movie, The Lone Ranger. Some projections are that it could lose $100 million. Maybe Johnny Depp should return his fee for starring in the flick to help balance costs…
In spite of the flop, the company still has a lot going for it, including an enviable history of strong earnings and dividend growth. All of the fundamentals are in place for continued success. The Walt Disney Company (NYSE:DIS) has manageable debt (long term debt/equity = 0.32), solid gross margin (27%) and a strong management team led by CEO Robert Iger, who just signed on for a few more years (and a few more million.) The current P/E ratio of 19.7 doesn’t make the stock a value play but it’s also not overly expensive either.
The Walt Disney Company (NYSE:DIS)’s acquisition late last year of LucasFilms, which controls the rights for the very valuable Star Wars franchise, should pan out down the road. Just the licensing fees on Star Wars merchandise alone are worth more than $200 million per year for the company. And when the next movie in the series is released in 2015, even more revenue will flow The Walt Disney Company (NYSE:DIS)’s way. The company’s ESPN division has grown exponentially, and generates tons of advertising revenue and affiliate fees — about $9.4 billion worth — to help tide The Walt Disney Company (NYSE:DIS) over when a major movie is late or flops. The company will probably mark frequent appearances as a stock all-star on its way to the Hall of Fame.
Conclusion
Will the all-stars continue to perform at such a high level in the second half and beyond? The four that I listed above, Thermo Fisher Scientific Inc. (NYSE:TMO), VF Corp (NYSE:VFC)., Ecolab Inc. (NYSE:ECL) and The Walt Disney Company (NYSE:DIS), seem to have the right fundamentals in place for that success to continue. It’s possible you will see them listed as all-stars for many years to come.
Mark Morelli has no position in any stocks mentioned. The Motley Fool recommends Thermo Fisher Scientific and Walt Disney (NYSE:DIS). The Motley Fool owns shares of Walt Disney. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article All-Star Stocks originally appeared on Fool.com is written by Mark Morelli.
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