Reopening or Not, this Brand Leader Can Head Higher

Media companies have moved to embrace streaming services in the past few years. That move has proven astute, given the pandemic. Now, a handful of companies with other operations are likely to benefit from reopening.

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  • Those companies include the cohort of media plays that also offer theme parks, cruise lines or the like. The poster child for this reopening exposure is The Walt Disney Company (DIS).

    Unsurprisingly, shares are starting to get upgraded as it appears that the pandemic restrictions are starting to end. The company’s various theme parks were all shut down at the start of the pandemic, but many have reopened at partial capacity. Some of those capacity restrictions are ending, while the company’s first park, Disneyland in California, is finally looking to reopen.

    Pent-up demand for tourism and leisure, not to mention the lingering difficulty of international travel, certainly point to strong gains there. Add in the company’s exploding streaming revenue as the pandemic led to a surge in home viewing, and shares certainly look attractive going forward.

    Action to take: Investors may like shares here. The company suspended its dividend at the start of the pandemic, and my resume it as soon as all parks are open at full capacity. In the meantime, the prospect for capital gains is still reasonable as earnings recover from reopening parks.

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  • For option traders, the July $200 calls, going for about $5.50, can deliver mid-to-high double-digit returns on a trend higher in shares in the coming months.

     

    Disclosure: The author of this article has a position in the stock mentioned here, but has no intention of changing or starting a new position in the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.