Crashing 51%, 3 Reasons to Buy This Netflix Rival in March and Hold for 5 Years
Key Points
From huge losses to significant operating profits, streaming is now a major tailwind for this business.
This company’s most lucrative segment, which leverages its valuable intellectual property, gives it an unrivaled competitive position.
Investors can buy this top entertainment stock at a 62% discount to Netflix.
- 10 stocks we like better than Walt Disney ›
The monster success that Netflix has achieved makes it a company that's deserving of all the attention it receives from investors. However, the streaming stock isn't the most attractive opportunity, mainly since its valuation looks expensive right now at a price-to-earnings (P/E) ratio of 37.7.
There's another media and entertainment stock that's trading 51% below its all-time record from March 2021 (as of March 16). Despite the plummet, here are three reasons investors might want to buy this Netflix rival in March and hold for five years.
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Image source: The Motley Fool.
This company's streaming segment is exhibiting financial strength
The business that investors need to consider buying is Walt Disney (NYSE: DIS). The first reason why is the financial success being exhibited by its direct-to-consumer streaming segment, which includes Disney+ and Hulu (excluding Hulu Live TV). It registered operating income of $1.3 billion in fiscal 2025 (ended Sept. 27, 2025), up 828% from $143 million in the year before.
For fiscal 2026, the leadership team expects this segment to post a 10% operating margin. Assuming there's 10% revenue growth this fiscal year, it implies $2.7 billion in operating income will be reported by the Disney+ and Hulu streaming services combined. Compared to the massive losses just a couple of years before, this development is welcomed by investors.
Experiences bring the magic of intellectual property to the physical world
Disney's video entertainment gets a lot of buzz. However, the most critical segment comes from its experiences, such as its theme parks and cruises. Disney has parks and resorts around the world, and it plans to open one in Abu Dhabi next. It's also significantly expanding its cruise fleet from eight ships now to a total of 13.
Management clearly sees a lot of potential for the experiences division. The financial performance is hard to ignore. It boasted a 33% operating margin in the first quarter of fiscal 2026 (ended Dec. 27, 2025). And durable revenue growth has been achieved over the years.
It's impossible for competitors to copy what Disney has built. The company owns so much valuable intellectual property that it will likely never run out of ideas to create new experiences.
The current valuation means now is the time to act
Maybe the most convincing reason to scoop up Disney shares in March comes down to the valuation. It's extremely compelling. The stock can be bought right now at a P/E multiple of 14.5. This is a sizable 62% discount to where Netflix currently trades.
The market still appears to be cautious, which is understandable. Disney's share price has lost half its value in the past five years, while Netflix is up 83%. But given the desirable qualities the House of Mouse possesses, Disney is poised to be a winning investment over the next five years.
Should you buy stock in Walt Disney right now?
Before you buy stock in Walt Disney, consider this:
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool has a disclosure policy.
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