On day’s like today when the markets give you a head-fake, it’s sometimes hard to remain positive.
The morning started off on a positive note rising over 70 points but by day’s end there were more sellers than buyers – we would be going into this weekend on a losing day – down almost 180 points.
Fear not, I like to use days like this to look for bargains and I think I found a couple…
Topping things off
I mentioned back on the August 1st DDI blog posting that one of my near term goals was to start topping off my existing positions. Today I added 25 shares of Cherokee (ticker: CHKE) bringing the portfolio total to 50 shares.
I added to my position in Cherokee for 3 main reasons:
- Well off it’s high of $20+ from Dec 2010
- Current price point allows me to double my current share count
- Pays ~ 6% dividend yield so adding shares will increase my overall DDI portfolio yield
- Stock will go x-dividend with the next few days allowing me to capture the next dividend ASAP
The House of the Mouse
While I know that I had indicated that I wasn’t looking to add any new positions to the DDI portfolio and that I would concentrate on topping-off the existing ones – I spotted a bargain today I just couldn’t pass up.
Disney (ticker: DIS) is currently trading in the low 30’s after coming off a recent high this spring of over $44/share – that works out to a discount of almost 30%! Disney is definitely a CORE holding that I would look to add to the portfolio give the right price and even though the yield is just over 1% the quality of this holding will more than make up the difference in the long run.
Analysts often use “spot-checks” such as average number of customers in a store or average transaction dollar amount per customer, where they will check on current sales trends of a company to determine the near term performance of a company’s stock.
In researching Disney, I found a couple of metrics that I felt were good indicators of strong longer term growth:
- Been to a Disney park lately? – Ticket prices have been raised as much as 10% not once but twice in the last 12 months!
- Disney Cruise Line‘s newest ship, “Fantasy” won’t even come online until March 2012, yet it’s booked solid through September and beyond!
- Adventures By Disney the high-end $5000/pp Disney travel agency continues to add new locales such as New Zealand and sells out to boot!
- While at Castaway Cay, Disney’s private island some travelers have paid $500/day for the daily use of a cabana and they sell out in minutes!
From what I can tell, Disney continues to own and maintain a captive audience that adores it’s products and services. That translates into strong pricing power where Disney can continue to raise it’s price points and ultimately it’s profits.
I’m happy to add a strong company like this to the DDI portfolio as I know over time those strong earnings will be returned to shareholders through ever increasing dividends.
If so, you might want to check out some of my other recent buys including: