5 Best Undervalued Stocks To Buy Now

4. The Walt Disney Company (NYSE:DIS) 

Number of Hedge Fund Holders: 92

The Walt Disney Company (NYSE:DIS)’s troubles seem to have no end in sight. Its movies are receiving lukewarm reception, it’s losing Disney+ subscribers to competition and its traditional business is faltering amid declining viewership. And recently, The Walt Disney Company (NYSE:DIS) channels went dark on Charter cable systems due to a carriage dispute. But many long-term analysts still believe The Walt Disney Company (NYSE:DIS), under the leadership of Bob Iger, can turn around its business. The Walt Disney Company (NYSE:DIS) shares have fallen about 28% over the past one year. Though The Walt Disney Company (NYSE:DIS)’s PE ratio is still 65, many mainstream media outlets believe the stock is undervalued.

RiverPark Large Growth Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q2 2023 investor letter:

“The Walt Disney Company (NYSE:DIS): DIS was a top detractor in the quarter following mixed FY2Q results. Revenue of $22 billion was up 13% year over year, although EPS, at $0.93, was down 14% year over year. Disney Plus, part of the company’s direct-to-consumer business (DTC), had better subscriber numbers than anticipated despite a price increase, although losses at the DTC business as a whole are growing. The linear TV business also continues to suffer secular headwinds with – 10% revenue growth, and the company faced inflationary cost pressures at its theme parks.

DIS is nevertheless blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, with a plan to release over 100 original titles per year on a $30 billion annual content production budget. Now that the disruption in its theme park, cruise and theatrical businesses has come to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution.

We think the return of long-time CEO Bob Iger will lead to higher and more consistent profitability at the theme parks, better value realization in the linear assets, and consolidation of the company’s DTC assets leading to higher profitability sooner. We therefore expect DIS to grow its free cash flow significantly over the next 3-4 years, from its depressed $1 billion last year, returning to and exceeding its previous $10 billion peak in 2018.”