Disney's brand loyalty, built up over nearly 100 years, and its ability deliver those movie, media and theme park brands to new generations of families sets up the company and its stock for years of success, Smead Capital Management founder Bill Smead told CNBC on Tuesday.
"You're getting a great risk-reward ratio right now," said Smead, whose investment firm owns about $80 million worth of Disney stock. The shares, which are up about 2.7 percent in 2019, are lagging the S&P 500's nearly 9 percent year-to-date increase.
"The thing about the Disney Corp., is a child is born in the United States and they're almost automatically a customer," said Smead. Parents and grandparents can't wait for the kids to experience the Disney ecosystem, he said.
"Therefore parks and movies and brands and characters just incredibly flourish because of the incredible goodwill attached to two prior generations of family before they come," he contended, a day after Disney reported better-than-expected quarterly earnings and revenue.
With the parks business contributing to those strong results, Smead said the company can almost name its price for how much to charge for admission.
"If you looked into the numbers, they raised the prices in the parks because they have got to find a way to regulate the number of visitors inside the park. You're going to ruin the experience for people if there's too many people in the park. The only way for them to regulate [is] through price," he said.