We're buying more of this media stock because it does not reflect catalysts ahead

Published Mon, Jul 1 202411:22 AM EDT

We're buying 50 shares of Disney at roughly $98 each. Following Monday's trade, Jim Cramer's Charitable Trust will own 880 shares of DIS, increasing its weighting in the portfolio to 2.63% from 2.49%. With Disney shares back under $100 each, we're stepping back in to take advantage of what we see as an enticing risk/reward. From a technical perspective, the stock is trading right around its 200-day moving average. More importantly, it's now being valued at about 18 times fiscal 2025 earnings, which will be the estimate that investors begin to focus on in the months to come. Disney is set to report fiscal 2024 third-quarter earnings next month. That's as cheap as we've seen this stock get since the last quarter of 2023. DIS YTD mountain Disney YTD A stock trading down to its long-term moving average and trading at a cheap valuation does not mean it's automatically a buy. In Disnye's case, however, it does, because we don't think the set-up properly reflects the fundamentals. We see several reasons for upside — and with Monday's add, we're upgrading the stock to our buy-equivalent 1-rating . For starters, the box office can only improve from here. "Inside Out 2" is being well received and became the first movie since "Barbie" to top $1 billion in global ticket sales. Disney has several releases from popular franchises in the works for this year, including "Moana 2," the Lion King prequel "Mufasa," and "Deadpool & Wolverine." There are more to come long term. As for experiences, analysts expect growth to rebound after the current quarter as we lap tougher comps. Parks demand is holding up despite the growing pressure from inflation, and the segment will be further aided by the launch of one new cruise ship later this year and two additional ones in 2025. While direct-to-consumer streaming losses are expected to continue in fiscal Q3, management on last quarter's post-earnings call back in May reiterated their intent to get the DTC unit to sustained profitability this fiscal year. In our view, the combination of technical support — and more importantly, an attractive valuation, along with what appears to be a strong backdrop for all key operating segments as we get into fiscal 2025, provide us a strong opportunity to repurchase some of the shares we sold back at the beginning of April, at a little over $120 apiece. (Jim Cramer's Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.