Friday, October 28, 2016

The Happiest Stock On Earth?

The Happiest Place On Earth.                The Most Magical Place On Earth. 

The Walt Disney Company   [DIS]

     It was a rough year for Disney. From January 1 through October 28 the company lost roughly 10.6% in market cap from the $11.15 drop in stock price. That's not great. When you look at from exactly 12 months ago the numbers are even worse. Down 17% from it's high of $120.65. The price of Disney stock currently sits at $93.85 and has a *P/E of 16.84. I like to look at price to earnings ratios sometimes and compare them to other companies. The benefit of this is to see of the stock is trading cheaply, or more expensive. When it's lower, then it's cheaper and vise versa. It's VERY important to look at P/E compared to other companies within the sector. Comparing Disney and Ford would give you nothing. Using the stock screener on finviz you can see that Disney sits 5th from the top when ranked in descending order. Out of 13 total, DIS sits closer to the cheap end.

     It looks like there could be a lot to be happy about in the future though. Technically speaking now looks like it could be an opportune time to buy into the company. 

     There are a couple things I see when I look at this chart. 

  1.  If we look to the top at the RSI (momentum indicator) we can see that for the last two weeks the momentum has been increasing. That's a good sign that volume is increasing and people are becoming more confident in the long positions of the stock.
  2. The MACD. The black line had crossed under the red in August and just in the past week has crept up to touch the moving average [red] line. If we look to the right we can see the the negative numbers as well. There could be a significant amount of upside as there is a lot of room to grow.
  3. The full stochastic chart is bullish. The black line crossed over the red line about last week. The numbers are also very low indicating there could be a tremendous upside in the mix.
  4. On finviz if we take a look at the daily chart that I'll post below, we can see the candlesticks have broken out of the wedge down pattern. Typically the wedge pattern indicates a reversal in the trend. Since DIS is trending downward and has recently broken out, it may mean the trend has/is reversing. 

I already own this stock which is why I looked it up and was pleasantly surprised. In my mock portfolio game I am going to look to purchase Disney though. In my opinion the price will continue to increase. How much is the question we all have to ask. To answer that, I'm just going to keep paying attention to the charts. Continue to check back here and I will update the post every now and again to see how we're doing. 

Thanks for reading.

*Some people choose to evaluate P/E in a different way. Meaning that the higher it is the more growth potential it possesses. Amazon is a classic example of this since their price to earnings sits at 193.58. People would say there is a lot of growth potential there.


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