There are several companies every year that experience explosive growth after taking on a new product or service. Many times, these are already established companies that simply come up with a new concept that customers love. There are other times when a company comes out of nowhere, like Facebook or Nu Skin, and blows away the industry. At the end of the day, a company needs to be able to turn a new concept into revenues and profits, which both of the companies discussed below do very well.
Disney is a company that has been great to shareholders over the past twenty years. The beta on the company’s stock is quite low, which means it is a consistent performer over time and experiences very little volatility. Disney has a variety of great income streams that continue to produce profitable results. One of the great things that Disney accomplishes is producing movies and then selling merchandise from the movies for years after the fact.
Frozen was one of the biggest movie hits in years in the childrens movie genre. Hundreds of millions of people around the world have watched the movie, and billions of dollars worth of merchandise has been sold as well. Disney is essentially able to use their initial products made after the release of a new movie as a channel to advertise the new movie, then once it becomes popular, the movie then acts as an advertising channel for more new products made of that movie. As their products and their movies have a snowball effect on eachother, Disney takes advantage of a lot of free advertising. This helps Disney to consistently be able to under promise and over deliver on their financial performance, which is why they have been so consistent with their shareholders.
Within the next year, Disney will release a new Star Wars movie. When Disney acquired the rights to the Star Wars series, everyone knew that they would be doing big things with the movie series. If history is any indication, Disney will market the movie very well, and then sell the Star Wars merchandise at a great profit.
The unique thing about Star Wars is that it spans multiple generations. Unlike Frozen, which is geared towards children, Star Wars strikes a chord with all age groups. There are many adults today that loved Star Wars growing up, which means that they may be even more motivated to purchase the merchandise for themselves and their children then they typically might be.
From a market value standpoint, Apple is the largest company in the history of the world. Apple has more cash available to them than many countries around the world do, and it continues to release product after product. The most recent product that Apple has produced is the Apple Watch. With health care in the United States and other developed nations becoming an increasingly big concern, the Apple Watch could prove to be a huge shift in the field of medicine.
Currently, the United States has a health care system that generally only treats disease and illness after the fact. However, with new technology like the Apple Watch coming on the market, there is potential for people to be able to see the signs and symptoms of the deadliest diseases before it’s too late. This could be a game changer in the healthcare industry, and as the population continues to get older there will be a lot of room for this product to improve and develop. With its initial release, Apple sold out of this product very quickly.
Apple’s stock is still less expensive compared to the rest of the market when looking at its price to earnings ratio. The price to earnings ratio is basically a quick formula that shows the stock price of a company vs. the forward expected earnings on a stock. With Apple’s stock below the market rate, there is still a lot of room for its stock to go up without without investors considering it to be too expensive. After its latest earnings release, Apple’s stock initially went up and then has been down the past couple of days. The recent drop in its stock price is a great opportunity to buy in before it continues on an upward trend.
Overall, both Disney and Apple are great companies that are innovative and have been great to both their shareholders and customers. Due to their great performance over the years, both of these companies have been relatively stable in the market. With both companies having new and innovative products coming on to the market over the next couple of years, their stocks have a great potential to break out and bring solid returns to shareholders. Both stocks still trade relatively cheap when considering their price to earnings ratio, which makes right now a good time to buy in on either one of their company’s stock.