“When you buy shares a company what are you buying into??”
I always ask this question when I conduct my investment classes.
Ans : You are buying into future profits of a business.
Questions one must always ask is where will the future profits be driven from? I love investing in companies which have a compelling future ahead of them. How do you identify such companies to invest into??
A good investment is very often a marriage between numbers and the story of a business.
Both must be equally good to back each other up.
Today I’d like to share a case study of a company I feel is a good buy going into the last quarter of the year.
This is a company we all grew up with. The company has a rich tradition dating back decades.
Yes. It is none other than the happiest place on earth.
So why am I all excited about Disney? What could possibly drive future profits?
Well firstly the LONG awaited Star wars Episode VII is slated to be released in December 2015. Disney acquired Lucasfilms back in 2012 and this will be the first stars wars film release.
If numbers were anything to go by I would dare to bet my last dollar that this is going to be a huge blockbuster. I would dare say Star Wars would give Jurassic World a run for its title.
For your information Jurassic World had the biggest opening weekend in history at 208.8 million dollars. The 2nd largest opening was Marvel’s the Avengers at 207.4 million dollars. Well those are fantastic numbers but as an investor what excites me most is that both these films are under Disney. Enter : Star Wars.
Well that’s just one of the upcoming projects for Disney that im really excited about.
Movies are awesome but the sky high revenues last for a month or two before the next blockbuster film is released.
So what excites me more? A business model which churns money day on day, month on month and year after year!
That my friends, will come from the opening of the new Disneyland in Shanghai. It is slated to open early next year. It will be the sixth in the world and the first Disney theme park to open in 10 years.
Like other Disney parks, Shanghai’s version will have a classic 420-room Shanghai Disneyland Hotel as well as an 800-room Toy Story Hotel.
The attraction is slated to attract millions of visitors with OFF THE CHART crowds at its opening. The hotels will not be able to meet the massive demand from the Chinese.
Now that’s something that I would definitely want to buy into.
Well folks that’s the story behind the company. Lets have a look at its numbers. It has very healthy capital appreciation that’s for sure. Over the past 10 years the stock has had a Compounded Annual Growth Return (CAGR) of 20% per annum.
It has grown in earnings steadily over the last 10 years. More impressively the company has constantly grown the cash they hold while holding debts down at a very reasonable level. Its net margins have also been constantly increasing.
Very impressive numbers to back the story up too.
Even more interestingly the stock has had a pullback of about 25% due to the US market correction recently. That made the stock a whole lot more attractive even though it isn’t exactly dirt cheap.
Definitely a company I would want to own in my star studded portfolio.
I hope you’ve benefitted from this sharing.
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p.s. This is not a recommendation to buy or sell any of the above mentioned equities. Please do your OWN due diligence. InvestingChamps Pte Ltd or myself will not be held liable for our views. Do exercise caution and be responsible.