Just got back after a week in Orlando. I was there for Gartner's IT Expo but managed to slip out a couple of times. :-)
Went to Disney's Epcot, Universal Studios, among other places. Both Disney and Universal seemed fairly packed.
A couple of differences between the two parks that I noticed (empirical):
1) A lot more foreign tourists at Epcot than at Universal. Disney's global brand equity is phenomenal. Mickey Mouse is right up there with the Marlboro Man in terms of universal recognition. (BTW, check out price on MO.)
2) Parents who take their kids to Disney's parks get raped by Mickey and friends and leave with much, much lighter pockets; Merchandising at Disney seems much more robust than at Universal.
I am still not totally convinced about DIS. General market valuations still concerns me. DIS can go lower. Its 52-week high of 38 was insanity. I wouldn't be surprised if DIS hits its 3-year low (~17). Its P/E is still over 30. Competition from Viacom, Nickelodeon, and others is only going to get more intense. The innocense of Mickey Mouse is being replaced by other characters at an earlier and earlier age in a more and more cynical world.
Pluses? DIS can put an image of Mickey on a piece of dog turd and sell it for $10. And people will buy it. DIS can put its name on a local playground and charge $35 for admission. And people will pay. Intellectual property and brand equity like that is developed over decades. Warren Buffett said that if you gave him $100 billion, he couldn't build a brand with as much global recognition as Coke. Likewise with DIS (probably no coincidence that Buffett owns a lot of KO and DIS).
I think the main thing holding me back is that I still believe there will be a significant correction in the market. It may be happening right now. I will be keeping an eye on DIS. I am going to buy for a long-term position. I just think it can still drop more, especially if the Dow hits 9000.
Over the long-term, consumer companies with superior universal recognition will be very good buys on very significant dips. Companies which immediately come to mind: KO, DIS, MO, G. Coke, Mickey Mouse, and the Marlboro Man are the new imperialists of the 21st century. As wealth spreads throughout the world, the earnings growth for these companies will be awesome. |
