Why Walt Disney (NYSE: DIS) Is a Buy

Written by Luke Burgess
Posted April 27, 2022

In the 1970s, Nestlé (SWX: NESN) was accused of causing the deaths of hundreds of thousands of infants in third-world countries by proliferating the use of its baby formula products at the expense of natural breastfeeding.

The report that sparked an international boycott of Nestlé was titled “The Baby Killer.”

nestle1974 report "The Baby Killer" and poster by Rachael Romero

The boycott against Nestlé was dropped in 1984. And despite being accused of being responsible for the deaths of 66,000 infants in 1981 alone, people eventually forgot.

Mr. Market certainly forgot Nestlé’s past sins.

From the mid-1990s to today, shares of NESN have climbed more than 1,500%.

nestle graph

The Nestlé infant formula scandal happened quite a long time ago. But you might remember this disaster a little better…

In 1989, the Exxon Valdez oil tanker struck a reef in Prince William Sound, Alaska. The accident let loose nearly 11 million gallons of crude oil into the ocean waters.

It’s still considered one of the worst man-made environmental disasters in history. And for Exxon (NYSE: XOM), the event was a PR nightmare.

exxonAround 200 people near San Diego to protest the use of Exxon products (July 1989)

Protests erupted around the country as the nightly news showed images of oil-covered animals. Politicians, lawmakers, community leaders, and environmental groups almost immediately began urging consumers to boycott Exxon products.

Following the spill, share prices of Exxon immediately dipped on heavy selling amid fears the boycotts would affect sales. And for a short time, some people did in fact avoid buying from Exxon.

But again, people eventually forgot. And shares of XOM recovered. Here’s how the stock has performed since then.

xom

I point these two corporate PR disasters out because if Nestlé can recover after accusations of being a “baby killer,” and Exxon can recover after one of the worst man-made environmental disasters in history, then certainly Walt Disney (NYSE: DIS) can recover from a political beef with the governor of Florida. 

I’m still very confused as to why exactly Ron DeSantis chose to go to war with Disney over its criticizism of the “Don’t Say Gay” bill.

Of course, Disney is Florida’s biggest political influencer. And I suppose that Disney taking a stance against that particular bill could influence others to take a similar stance.

But it should seem obvious that the public backlash against going to war with a political and social powerhouse such as Disney would be worse than to simply agree to disagree with their response.

Either way, shares of DIS have taken a big hit over the past several months. This time last year shares of DIS were nearly $190. Today they sit at a 52-week low at just over $115.

Walt Disney (NYSE: DIS) — Two Years
disney

Shares of DIS took their biggest hit most recently after DeSantis signed a bill to repeal the company’s special tax status in Florida. However, many analysts are doubtful that losing that tax status will be very harmful to the company over the long-term.

Stripping Disney of its tax status isn’t even turning out to be a good political move for DeSantis. Some have said that the change could saddle Florida taxpayers with a $1 billion bill. So I wouldn’t be surprised if DeSantis changes his mind about the repeal.

With DIS at a 52-week low, it’s not impossible for shares to continue moving lower. But over the long-term I’m very certain that people will sooner or later forget about the whole thing and Disney will go on to do business as usual. So I think the stock is a pretty decent buy right now.

Consider another very recent example: Papa John’s (NASDAQ: PZZA).

Do you remember when Papa John’s was accused of racism back in 2018?

Now that I mentioned it, you probably do. But it’s mostly likely you’ve all but forgotten about the whole thing.

When the story was new, the company’s sales fell 16% and the stock took a hit. But take a look at PZZA since then.

pzza

Mr. Market is extremely fickle.

He hates you one minute. Then loves you the next.

Buy the hate. Sell the love.

I'll leave you today with a long-term chart of DIS.

Walt Disney (NYSE: DIS) — 1985 to Date
disney

Buy the hate.

DIS is probably a very safe bet over the long-term.

Want another very safe bet? Defense.

According to a report released Monday by the Stockholm International Peace Research Institute, global defense budgets totaled $2113 billion in 2021.

The U.S. government is responsible for the lion’s share of that spending. In 2023, the United States government is projected to spend $773 billion on defense.

And that number is rising every year, despite whether there’s a Republican or Democratic president in office. But what most people don’t know is that the U.S. spends billions on clandestine military programs collectively called "The Black Budget."

It’s not a conspiracy theory. The government simply needs to keep secrets, especially when designing the technology that supports its defense systems. And from these secret defense programs, technology emerges that often revolutionizes the world.

Microwaves, GPS, digital cameras, radar, synthetic rubbers and plastics, jet engines, the internet… all of these were technologies once developed under secret government defense programs.

Even duct tape. That’s right, even duct tape was invented as a necessity of WWII.

In the process of developing these technologies, a select group of insiders becomes incredibly wealthy. And that’s why, in his newest publication, Jason Simpkins has set out to uncover these programs.

In his most recent research Jason Simpkins reveals the "Retinal Matrix" revolution that’s about to kick into high gear. This technology is a blending of the physical and the virtual in a way that has only been possible in science fiction movies.

It’s really exciting stuff. To learn more about the "Retinal Matrix" revolution, just click here.

Until next time,
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Luke Burgess

Luke’s analysis and market research reach hundreds of thousands of investors every day. Through his work with the Outsider Club and Junior Mining Trader, Luke helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.

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