We recently compiled a list of the 10 Best Stocks Under $100 To Invest In. In this article, we are going to take a look at where The Walt Disney Company (NYSE:DIS) stands against the other best stocks under $100.
Wall Street experts believe that mid-cap stocks might be well-placed for a strong run-up. As per Ryan Detrick (Chief Market Strategist at Carson Group), historically, midcaps outperform once the US Fed actually initiates cutting rates. According to him, the small and mid-caps are expected to surge up to 20% over the upcoming 12 months, far exceeding the large-cap counterparts.
Furthermore, Goldman Sachs believes that mid-caps outperform large- and small-cap stocks over the 12 months after the first rate cut. As market experts continue to expect a soft landing, the investors might look for other options apart from the biggest companies.
What Happened in Q3 2024 and What to Expect in Q4 2024?
As per the earnings sight report from FactSet dated 1st November, the S&P 500 continues to report mixed results. The Q3 remained strong for risk assets and safe havens, with the US markets delivering an all-time closing high to finish Q3 and bonds posting positive returns, as per JPMorgan Asset Management. Overall, the S&P 500 gaining for 4th straight quarter (making 18 new highs), and the US Treasuries and corporate bonds rallying with the decline in yields dominated much of the movements in Q3 2024. The asset management firm also added that gold saw its biggest gain since Q1 2016 (thanks to the expectations of faster rate cuts) and China’s stimulus supported equity market returns.
What is expected for Q4 2024 now? JPM believes that positive expected earnings growth, cooling inflation, easing policies of central banks, and firm job creation should help create a strong backdrop for risk assets. Wall Street analysts believe that mid-caps might be in a position to see strong growth moving forward.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Outlook for Mid-caps
As per BofA’s Jill Carey Hall, mid-caps can be considered as the “best hedge” for the near term.
According to Hall, the mid-caps have experienced better recent guidance and revision trends and have also surpassed the small caps on average in the downturn scenarios. Mid-caps can also act as a hedge against fewer-than-expected rate cuts, considering that small caps are rate-sensitive.
According to Goldman’s Jenny Ma, the start of the rate-cut cycle remains a potential source of incremental equity demand and a boost to broader investor risk sentiment. Moreover, over the short term, mid-cap performance as compared to other segments is expected to be dependent on the strength of economic growth data, along with the pace of the easing cycle.
As per Wells Fargo, mid-cap growth stocks are technically oversold as of now. Despite this, these stocks have a significant scope to outperform. It also added that stability in their earnings, risk, liquidity, and balance sheet appear to be more attractive as compared to small caps.
With these trends in mind, let’s take a look at the 10 Best Stocks Under $100 To Invest In.
Our Methodology
To list the 10 Best Stocks Under $100 To Invest In, we first used a screener to extract stocks trading under $100. Next, we narrowed our list by selecting the ones having high hedge fund holdings. Finally, the stocks were arranged in the ascending order of their hedge fund sentiments, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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The Walt Disney Company (NYSE:DIS)
Stock Price as of November 6: $98.89
Number of Hedge Fund Holders: 92
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. The company has 3 segments: Entertainment, Sports, and Experiences.
The Walt Disney Company (NYSE:DIS)’s portfolio of treasured brands such as Marvel, ESPN, Lucasfilm, and Pixar provides it with a competitive edge. These assets should help the company remain at the forefront of the broader entertainment world. Despite the short-term challenges, the long-term outlook for The Walt Disney Company (NYSE:DIS)’s parks remains positive. The company’s streaming services, mainly Disney+ and Hulu, are the focal point for growth. Hulu’s content strategy, which allows for a higher ad load, offers the company an advantage in the connected TV (CTV) space.
The Walt Disney Company (NYSE:DIS)’s future growth prospects are strong, courtesy of its diversified business model and healthy brand recognition. Its ability to leverage a broad range of assets and media channels should help it navigate a challenging business environment. The company’s diverse portfolio of assets throughout theme parks, streaming services, media networks, and consumer products offers multiple avenues for growth. The synergies between these divisions enable The Walt Disney Company (NYSE:DIS) to cross-promote and leverage intellectual property throughout various platforms.
The company’s key strengths include strong brand recognition, robust intellectual property, and a content library. Considering its strong presence in streaming via Disney+ and Hulu, The Walt Disney Company (NYSE:DIS) remains well-positioned to capture an increasing share of the digital advertising market. Disney’s rich first-party data through its various platforms can be leveraged to provide targeted advertising solutions. This can help it command premium rates from advertisers.
As per Wall Street analysts, the shares of The Walt Disney Company (NYSE:DIS) have an average price target of $112.47. Meridian Funds, managed by ArrowMark Partners, released its second quarter 2024 investor letter. Here is what the fund said:
“The Walt Disney Company (NYSE:DIS) operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company’s stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management’s commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company’s streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.”
Overall, DIS ranks 3rd on our list of the best stocks under $100 to invest in. While we acknowledge the potential of DIS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than DIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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