Billionaire Ray Dalio’s Long Term Stock Picks Include Microsoft Corporation (MSFT)

Dalio and his team reported a position of about 230,000 shares in The Walt Disney Company (NYSE:DIS) in the filing. In Disney’s most recent quarterly report, revenue was up 10% versus a year earlier; the media and entertainment company grew sales and operating income in all four major segments, including reversing a loss in studio entertainment. Media networks, by far the largest source of operating income for the company, grew its segment profit by 8% as ESPN and other assets in that area continue to be gems for Disney. Overall earnings were up about 30%, and while that rate is not sustainable (having been partly fueled by the recovery of the film business) the company’s prospects seem healthy.

Disney carries trailing and forward P/Es of 20 and 16, respectively, which is about in line with where other large media and entertainment companies trade. Assuming that the company can hold its margins about steady on the strength of its brand and grow revenue (and therefore earnings) at a mid to high single digit rate going forward, that valuation seems about fair. As such Disney wouldn’t appear to be an attractive growth stock unless the company proves able to generate higher growth rates through some combination of increasing its appeal in developing countries and its success in maximizing the strength of Lucasfilm and Marvel in their appropriate markets as they have done with Disney Princesses.

Microsoft Corporation (NASDAQ:MSFT) and Disney are closely enough followed companies that investors will probably be aware if their price falls enough or their business prospects improve enough that they become attractive value picks. Oracle offers both reasonable multiples and a decent chance that the company will be able to sustain its current business going forward even if further margin increases are not in the cards, and so at least at this point would appear to be worth a closer look.

Disclosure: I own no shares of any stocks mentioned in this article.