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Disney & Starbucks: 2 Stocks You Can't Ignore

Disney: The Happiest Stock On Earth

Summary

  • Shanghai Disneyland should add incremental earnings in the near-term.
  • The stock is off almost 8%, which to me is a buying opportunity.
  • ESPN doesn’t appear to be the problem some expected.
  • Monetizing the brand is the key to long-term growth.

By Tony Termini

Disney's new theme park in Shanghai should be a huge hit like its parks in the United States.

I bought The Walt Disney Company (NYSE:DIS) on July 3, 1997 and have held it to this day. Here's why I think you want to buy it now.

The newest DIS theme park will open in Shanghai in a couple weeks extending the Happiest Place on Earth brand further into China. Given the price movement of the stock in the last few weeks, I think that right now would be a good time to add DIS to long-term portfolios (I will be buying the October 100 calls after this article is published). I also think you definitely want to own DIS before they report 3 rd quarter 2016 earnings on August 9 th. Before I discuss the fundamentals and what, in my opinion, will drive earnings higher through 2017, let's look at what's going on right now.

When DIS reported 2nd quarter 2016 earnings on May 10 th, they missed analysts' expectations by $0.04. The result is that the stock is off by more than 7% since then... CONTINUE READING



Starbucks: Can't Stop, Won't Stop

Summary

  • SBUX had a terrific Q2 fiscal 2016.
  • China’s growing middle class is most likely to patronize SBUX’s brand.
  • SBUX has decided to jump into the RTD tea market at an opportune time.
  • This is as good a time as any to buy SBUX.
  • Shares possess an upside potential of at least 10%.

By S. Hasan Abid

Few can disagree that Starbucks (NASDAQ:SBUX) under Howard Schultz is one of the most successful businesses in the world today. Currently SBUX operates a whopping 25,000 stores in 70 countries around the globe and despite the company's vast scale of operations, it is showing no signs of slowing down.

SBUX's latest earnings transcript was literally 'as bullish as it gets'. Global comps and U.S. comps were up by a staggering 6% and 7% respectively. Compared to last year, GAAP EPS increased by 18% in Q2 fiscal 2016, while non-GAAP operating income and margin expanded by 11% and 0.3% respectively. In particular, I was impressed to see considerable improvement in profitability of SBUX's China store portfolio that was accompanied by 5% transaction growth.

All this is well and good. There can be no doubts about the underlying strength of SBUX's business. But choosing healthy businesses is just one aspect of investing. Intelligent investors, as per Benjamin Graham's philosophy, ought to invest in solid growth but not 'overpay' for it. Hence, I wonder: If I buy SBUX now, will I be overpaying for it... CONTINUE READING

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