Stocks - The Best Buys 2

[wwkayaker]

Just through reading some articles that caught my attention, I can see how some companies have stayed strong but how has a company like Disney rallied from $80 to $106 in a month? 75% of the Disney business is sitting idle. Disney+ is a bright spot but it doesn’t make up for the losses from the parks, networks/ad revenue, movie releases, cruises/hotels, etc.

Amazon has had a big jump which seems to make sense at first glance but around 50% of operating income is from cloud services. From what I’ve read, the margins on consumer purchases aren’t great. Less consumer cash means less discretionary spending and it seems we should be headed that direction. With company bankruptcies likely on the way, I would think cloud service demand would drop too. Yet, the share price has risen $700/share (close to 50%) in 6 weeks.

I don’t get it. I agree another shoe has to drop sometime.

[Jason14h]

Originally Posted by wwkayaker

Just through reading some articles that caught my attention, I can see how some companies have stayed strong but how has a company like Disney rallied from $80 to $106 in a month? 75% of the Disney business is sitting idle. Disney+ is a bright spot but it doesn’t make up for the losses from the parks, networks/ad revenue, movie releases, cruises/hotels, etc.

Amazon has had a big jump which seems to make sense at first glance but around 50% of operating income is from cloud services. From what I’ve read, the margins on consumer purchases aren’t great. Less consumer cash means less discretionary spending and it seems we should be headed that direction. With company bankruptcies likely on the way, I would think cloud service demand would drop too. Yet, the share price has risen $700/share (close to 50%) in 6 weeks.

I don’t get it. I agree another shoe has to drop sometime.

Unless a company is at risk of cutting dividends because of COVID or going Bankrupt, there forward looking potential has not changed long term

A company like a Disney may actually have picked up subscribers to Disney plus. So unless you believe long term less people will go to movies , Disneyland and on cruises , why would their next quarterly earnings matter

[GGG]

Originally Posted by Jason14h

Unless a company is at risk of cutting dividends because of COVID or going Bankrupt, there forward looking potential has not changed long term

A company like a Disney may actually have picked up subscribers to Disney plus. So unless you believe long term less people will go to movies , Disneyland and on cruises , why would their next quarterly earnings matter

Lost profits now, even if the dividend is maintained, will discount future cash flows for the company so there should be an impact.

[Krovikan]

One theory I have on what is going on is that after the crash a lot of institutional and big money investors decided to purchase stocks that are on the cheap right now. This could be what is causing the market to stay a bit inflated right now, but I am confused as well by some of the moves I've seen lately.

[OMG!WTF!]

Originally Posted by GGG

Lost profits now, even if the dividend is maintained, will discount future cash flows for the company so there should be an impact.

I think you might be one step behind. Disney went down like 40% based on the fear of what covid would do to earnings now. We've already seen that shock. Now everyone is looking to reopening and planning for that good news story

In general I think the market reflects exactly the sentiment here...sideways trading until something indicates more or less good news in the future.

[wwkayaker]

Originally Posted by Jason14h

Unless a company is at risk of cutting dividends because of COVID or going Bankrupt, there forward looking potential has not changed long term

A company like a Disney may actually have picked up subscribers to Disney plus. So unless you believe long term less people will go to movies , Disneyland and on cruises , why would their next quarterly earnings matter

https://www.nytimes.com/2020/04/12/b...ronavirus.html

According to this article, DIS is losing up to $30M/day with no certainty as to when operations will be 100% open again. If the bar on the corner was selling for $100/share pre-pandemic and is now experiencing a loss of revenue of 75% with no certainty of when those revenues will be recovered (if ever), I would want a big discount for the risk. Who knows if it’s 6 months or 5 years of lost earnings.

[manwiches]

I bought when it was at $85, and am holding a long position on Disney, and will take my my profits out eventually. My thoughts on buying when it crashed a few weeks ago is for the same reasons already echoed.

- They have other revenue streams
- They also own ESPN
- People will go back there once it's safe, including myself.
- Disney +
- Their forward looking potential has not changed. Sure, their current revenue and earnings report for the foreseeable future is not great. But I honestly don't think this will change the majority of people's minds in going, once it's safe to do so.
- and on and on... they're so diversified it's not even funny

They seem to hold a relatively consistence resistance of $115ish. I anticipate that it'll get there and some, but it will take a bit of time, and I'm likely in for a while. I would think it would spike quite a bit once they announce park openings. Hoping for that $150 ATH from last year... one can dream right? lol

[jayswin]

Originally Posted by OMG!WTF!

I think you might be one step behind. Disney went down like 40% based on the fear of what covid would do to earnings now. We've already seen that shock. Now everyone is looking to reopening and planning for that good news story

In general I think the market reflects exactly the sentiment here...sideways trading until something indicates more or less good news in the future.

That's why I'm really afraid of a second wave in the fall. If the US blows this as badly as they appear to be and get hit just as bad in the fall while we're months away from a vaccine, leading to a second shutdown? Look out.

[wwkayaker]

Nice. You were more patient than me. I bought Disney at $92 and sold today. I had FOMO and wasn’t as disciplined as I would have liked. What is the opposite of FOMO, fear? Maybe I succumbed to that today.

I sold because I’m unsure of where this economy is going to be in a year.

My thinking today is that:

-other revenue streams aren’t doing much right now; cruises/hotels/parks/restaurants/retail stores/movie theatres shuttered
-ESPN with no major sports playing results in ad revenues declining; the 10 part Jordan docuseries has had good numbers; if I recall correctly, ESPN costs cable providers $9 per subscriber but how many cable subscribers have dropped it due to no sports-I would think a lot
-major movie releases delayed
-Disney+ has had a lot of subscriptions which will probably rise more the longer the lockdowns remain but I’ve read that this segment isn’t yet profitable

In ten years, I think Disney will be fine but I don’t know.

[wwkayaker]

Originally Posted by jayswin

That's why I'm really afraid of a second wave in the fall. If the US blows this as badly as they appear to be and get hit just as bad in the fall while we're months away from a vaccine, leading to a second shutdown? Look out.

I’m not sure we will have to wait until the fall to see the impact. I’m concerned with the openings happening in the US. I suspect the infection numbers are going to jump in a few weeks.

[burn_this_city]

I think selling Dis is a smart move here. Sure there’s Disney+ but the parks won’t reopen until 2021. I read somewhere they are burning $30M a day right now and the Fed pump will only last so long. The streaming subscription won’t cover the cash burn.

The whole market is a brrrrr prop job right now. I think folks would be wise to take some wins and bank them.

[DoubleK]

Is it just me or are trading volumes extremely light?

The ETFs I'm on are trading at half the average volume or less.

[OMG!WTF!]

Originally Posted by DoubleK

Is it just me or are trading volumes extremely light?

The ETFs I'm on are trading at half the average volume or less.

Light relative to march maybe. But pretty average on the nyse at least. Today was a bit higher than April's average.

You thinkin calm before the storm?

[Leondros]

The market come back is very strange to me. Nothing has really materially changed and if anything it looks like there is a potential to be back in some semblance of a quarantine in the fall.

What has materially changed since exactly one month ago when the S&P was at 2,400? Now its breaching 3,000, 400 off the high?

[wpgflamesfan]

Originally Posted by Leondros

The market come back is very strange to me. Nothing has really materially changed and if anything it looks like there is a potential to be back in some semblance of a quarantine in the fall.

What has materially changed since exactly one month ago when the S&P was at 2,400? Now its breaching 3,000, 400 off the high?

Trillions in stimulus globally plus no alternatives to earn a return with yields (both for governments and corporates) dropping substantially? Who knows at this point...

[OMG!WTF!]

Originally Posted by Leondros

The market come back is very strange to me. Nothing has really materially changed and if anything it looks like there is a potential to be back in some semblance of a quarantine in the fall.

What has materially changed since exactly one month ago when the S&P was at 2,400? Now its breaching 3,000, 400 off the high?

Markets are definitely forward looking. They tend to bottom out 3-11 months before the actual economy does.



What else are you going to do with your money...if you're a massive fund seeking return? In some places it costs you money to hold cash. There's a lot of cash on the sidelines now.



Money looks for a reason to change direction. We had a mass of bad news and likely that narrative turned as we got ever more optimistic scenarios appearing. The curve has flattened and that's what it took to change the direction of money. If/when that changes again...therapeutics/vaccines prove futile, infections increase, virus mutates and becomes airborne Ebola, the market will go down again. Today's big jump in the market brought to you by the good folks at Gilead.



I think most importantly the market is very heavily weighted towards a few massive companies. Amazon is like 40% of its sector. These mega caps are doing very well and so that stabilizes the over all market. When you try to figure out what Disney is all about by analyzing its business, you're playing a no win game. Disney is like .97 out of 1 on a scale that measures correlation to the over all market. That means it doesn't move on its own story. It has no alpha. It does what the market does. And that's the case with most index stocks. Big money isn't buying Disney, its buying the index that includes Disney.

[manwiches]

This is probably not going to hold for anybody looking to hop on now, but AgEagle Aerial Systems (UAVS) is utterly destroying the market today on an accidental release from their CEOs daughter, prior to their PR Release tomorrow, citing a partnership with a large distribution firm. The accidental video released was a video cap showing their logo with Amazon. This was rumored from last week, but more or less confirmed this morning.

It's up 127% and climbing all day. The swings are insane.

[DoubleK]

https://twitter.com/federalreserve/s...57721308516357

Some gold in the replies...

[troutman]

Tesla is on a wild ride. From 450 to 806 in less than one month.

[Fuzz]

Originally Posted by troutman

Tesla is on a wild ride. From 450 to 806 in less than one month.

Ya, I don't get Tesla in this market. They've lost all the benefit vs gas due to prices being cratered for the foreseeable future. And no one is buying cars right now, and many won't have the money to do so after. All the other auto makers are tanking. Why are they worth what they were before?