$DIS · The Motley Fool · 2026-10-29

I don't think people will cancel their subscriptions to Disney, Disney Plus, or Hulu. I do n't think they will cancel their ESPN subscription. I believe, especially in the upper segments of the market, that people will continue to visit Disney parks.

That's why I think buying Disney stock today with a forward price-to-earnings ratio of only 14.5, John, would be an exceptional choice. This does not mean that the stock cannot decline.

But this is an underrated company , and it continues to grow and invest in its products.

In a world where we increasingly use artificial intelligence and technology, those real-life experiences will become much more valuable.

I visited Disney and Universal Parks in Florida earlier this year. It's amazing how efficient Disney's management is, and how well they are able to generate profits from their business.

I think it will be the company we will look back on with appreciation if a bubble were to burst . This is the stock that will thrive. I certainly cannot disagree with the formulation of that thesis which calls for a focus on real-world experiences, regardless of whether the AI bubble bursts or not.

Therefore, this works in favor of the theme park experience, and even movies to some extent . This is not a company that relies on poor AI content. In theory, it possesses very valuable intellectual property that can be developed into high-quality content. So, this seems logical to me.

What I find difficult to accept is the fact that the stock has only risen by 20% in the last ten years . Therefore, there were many opportunities for Disney. Why will it finally be able to change course at this stage and become a good investment for shareholders?

Well, I can tell you that Disney has been through this before. If you look at Disney's long history, you'll find that it usually goes through a period of stagnation that lasts for a decade before something really changes its course.

So , if you look back to before Eisner came along in the early 1980s, the company was somewhat lost . They have lost their creative spirit. That business changed drastically, investing more in parks and raising prices there.

Incidentally, this is when those price increases actually started to be implemented.

Towards the end of his career, the stock did not advance in any direction for a period of time. Bob Iger comes along, buys Marvel, and buys Pixar. Everyone gets excited again .

Over the past fifteen years or so, many structural changes or transformations have taken place in the entertainment environment. This has created significant headwinds for Disney.

So, if you think about the decline of cable, this is not only going to affect a lot of their business, and the cable brands they were selling to companies, but it's also going to affect ESPN, which is a huge source of revenue for them.

The films are not achieving the success they used to . It is clear that digital broadcasting has taken over the scene. But which other established company is in a better position today than Disney in the field of streaming?

I mean, you have Netflix. It is clear that Netflix is the biggest player, followed by YouTube in the streaming field. I would argue that Disney is in third place.

This is actually a very good situation , and their broadcasting business continues to grow and become more profitable. But the part I wanted to review was the park works. So, these are the subsequent revenues for the 12 months since the end of 2022.

A compound annual growth rate of approximately 7 %. I think this will probably accelerate in the future as they undertake some of these major expansions that are happening around the world.

You have more cruise lines coming into service. Also, those margins are rising . The compound annual growth rate of operating income is approximately 8.5%. It has now exceeded $10 billion . This is the true essence of work today.

I wouldn't be surprised if I saw Disney get rid of some of its non-essential works. I mean, I don't know if ESPN really fits in with the Disney we know today. This is what I want to own, which is the amusement park business, and everything else surrounding it.

We hope they are somewhat profitable , but if this company, you know, grows to high single digits or perhaps low double digits over the next decade, then this could be an exceptional stock.

It is the type of stock that will not drop by 90% in the event of a market downturn. So, sometimes you want to be a little defensive during times of retreat.

$200 billion. We'll cut it next year and spend much less. And then we'll be left with a company that has positive cash flow." Many companies do not have that luxury. This puts them, in my opinion, in a completely different position if we are waiting for a bubble to burst.

I am not saying that they will be 100% protected because they are not . But this is the kind of company that will be able to exploit that as a point of superiority. Not everyone can say that.

Okay, tell us what you think about these four choices. Disney, C Limited, Alphabet, and B.J.'s Wholesale. If the AI bubble were to burst somehow, would these stocks be strong performers?