2012 looks like it could be a breakout year for Walt Disney, Cramer said Wednesday.
The reason, Cramer said, can be found in its recent 50 percent dividend boost, which brings the yield up to almost 1.7 percent at these levels.
“By raising their dividend so dramatically, I think Disney's management sent us a powerful signal that they have a ton of confidence in the business and its long-term prospects,” Cramer said.
The company has good reason to feel confident, he added. Disney’s latest quarter was a terrific upside surprise driven by better-than-expected margins at its theme parks. In addition to the theme parks and movies, it also has a television business, owning ABC and cable properties like ESPN.
“Disney simultaneously dominates two of the most lucrative parts of the entertainment universe: they have a brand that's beloved by children all over the globe … and at the same time, through ESPN they own one of the best known brands in sports programming,” Cramer said.
Disney’s media network business is in really good shape, he said. While people have been worried about attendance at its theme parks, Cramer believes once consumer confidence picks up, this will be a “consummate consumer play.” The movie business did poorly this year, but Disney has changed its strategy to focus on making fewer movies with bigger budgets and international appeal.
DIS is selling for 10.8 times earnings despite having a 13.5 percent long-term growth rate and is trading in-line with other media conglomerates. Cramer thinks it is “a steal” right here.
“If you’re looking to be merry in 2012, may I suggest you buy some Disney,” he said. “The earnings quality issues are behind them and it has catalysts galore going forward.”
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