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Monday, July 25, 2011


DIS took a hit last quarter mainly because of a movie (Mars Need Moms) did pretty poorly.  Prior to the quarter DIS was consistently trading with a trailing PE of around 19. Since the bad quarter DIS had some pretty good movies out, and given the performance of Thor and Captain America, the movie studio looks to do pretty well over the next few month. (And into the future, seeing how DIS continues to maximize the monetizing of the Marvel characters.)

If the report is strong, this could give the green light for DIS to trade with a trailing PE of 19 again. After next week, this would suggest DIS nears 44.  Adding support to the elevated stock price, and multiple, is the Sept quarter is estimated to produce an EPS of $0.67. This would be accelerated earnings growth, and multiples expand with accelerated earnings/revenue.

Basically, over the next 2-3 months I am expecting DIS to retest its high, and by the end of the year pushing high 40s.

Technically, DIS looks pretty interesting.  The daily suggests a nice consolidation took place, while maintaining the longer-term upward trend via its 200SMA. In the very short-term, the high 40 level is obvious resistance. This also facilitated by the weekly via the SMAs.

I think this resistance will be short lived as the quarter will give the green light to the big boys. Hence, I have been buying. I purchased the 40 Jan 2012 calls in the AM today. If DIS continues to decline (toward the multiple SMAs on the daily, near 39.5), I will add to the position.

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