Source: PaxForex Premium Analytics Portal, Fundamental Insight

Disney is the embodiment of the corporate dream, known for its box office blockbusters, global theme parks, and generations of intellectual property such as Marvel, Star Wars, and the animated characters that form the core of the Disney brand. 

Lately, Disney stock has been rising since it bottomed last March, despite the company's poor performance over the same period. The company is up 35% in 2020 and 9% in 2021.

Today, we suggest you look at a few reasons why investors can be confident in the company's success.

Despite its generally poor performance, Disney+, the company's premium streaming site, enjoyed tremendous success during the pandemic. Launched in November 2019, the site had 95 million paid subscribers by Jan. 2. 

Disney also owns general content site Hulu and premium sports streamer ESPN+. They had a total of 147 million paid subscriptions at the end of the first fiscal quarter of 2021, not far behind streaming leader Netflix's 210 million subscribers. The total number of subscribers is expected to reach 300-350 million by 2024, but no one would be surprised if that number is surpassed. Disney+ is also expected to become profitable in 2024. In the meantime, first-quarter direct-to-consumer (DTC) revenues were up 73% year-over-year. That wasn't enough to declare growth in the media content division, but it picked up to a 5% decline from Q1 2020.

Management is making the DTC business a key part of its operations. Restructuring began in October, resulting in separate content creation and distribution divisions, allowing for a better distribution of content to the right channels given the rapid adoption of streaming sites. Also, this week DTC is rolling out its Star-branded global shared content site, previously available in India and Indonesia, in several new markets.

If you've ever been frustrated when you couldn't find a movie you were looking for on Netflix, you're a target Disney customer. Disney offers the largest media library, which tends to release many of the highest-grossing movies under various studio names, including the eponymous Disney, Pixar, Marvel, and 20th Century, among others. This gives it considerable leverage in its streaming operations. Netflix is under some pressure to release 70 original movies in 2021 to try to keep up, but Disney's content machine is unrivaled.

Disney's sales plunged when the parks and theaters closed, as that segment typically accounts for more than half of its total sales. Even in the most recent earnings report covering the period ended Jan. 2, when some parks were open with limited capacity, sales in the parks segment fell 53%. 

Investors should not expect any meaningful improvement in the second quarter as some parks are still closed and others are 35% operational. And there is still much uncertainty about when things might change, which means the decline could last for a while. (Nonetheless, sales started falling in the third quarter of 2020, and the third quarter in 2021 should show a year-over-year increase.)

Management noted that attendance levels increased from the fourth quarter of 2020 to the first quarter of 2021, and the open parks were able to increase their levels due to strict sanitation protocols. It is confident of growth once regular operations resume and is already investing in two new rides and a new nighttime experience at Walt Disney World, as well as new experiences at other global parks. CEO Bob Chapek said there is "great demand" for park areas, and attendance is likely to grow whenever the environment becomes more favorable.

In the meantime, investors are buying now until sales recover and the stock price rises further.

Besides, Citigroup analyst Jason Bazinet recently updated his buy rating on Disney stock with an estimated value of $205, which is above Disney's current stock price of $194. The analyst believes Disney's focus is on quality, not quantity, and package plans that combine all three Disney services at a competitive price will continue to drive faster subscriber growth than Netflix over the next few years. 

Disney has had the advantage over the years of capitalizing on franchises with a huge cast of characters for new ideas. A franchise like Star Wars provides a long-running series of new movies and original series to keep subscriber churn low and attract new members. This is why Disney remains one of the most popular players in the marketplace to add to your portfolio.

While the price is above 182.00, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 194.00
• Take Profit 1: 210.00
• Take Profit 2: 217.00

Alternative scenario:

If the level 182.00 is broken-down, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 182.00
• Take Profit 1: 171.00
• Take Profit 2: 164.00