Apple

Better Buy in 2023: Apple Stock vs. Disney Stock – The Motley Fool


Many companies and investors will be happy to see 2022 in their rearview mirrors after the significant market declines that plagued the whole year. Rises in inflation and interest rates were detrimental to many businesses’ earnings growth, with their stocks suffering the brunt of economic challenges. 

However, the start of 2023 has Wall Street optimistic, as the Nasdaq Composite index is up 6% since Jan. 1. Companies such as Apple (AAPL 1.01%) and Disney (DIS 0.29%) enjoyed increases in their stock prices alongside the market’s recovery this year. These market leaders are titans of their respective industries, suggesting their stocks might be worth buying before they completely bounce back.

So, is your money better off with Apple’s or Disney’s stock? Let’s take a look. 

1. Apple

Apple shares have risen about 6% year to date, with new product releases and reports on future projects rallying investors. However, the company’s stock is still down 15% year over year, presenting a buying opportunity.

The tech giant’s shares make an asset for any portfolio thanks to consistent growth and high demand for its products. In fact, Apple’s stock rose 209% in the last five years (at this writing) and 672% in the last 10, making it an investment you can buy now and leave to grow over the long term.

The new year has only just started, and Apple has already announced additions to its lineup. The new products include upgrades to its MacBook Pro, featuring new M2 Pro and M2 Max chips, a more powerful Mac mini, and a second-generation HomePod. The new Macs bring Apple closer to completing its transition from Intel chips to its custom version, Apple Silicon. 

The company is expected to fully complete the changeover to Apple Silicon this year, relieving itself of any reliance on Intel and boosting profit margins in its Mac segment by ending the costly partnership.

In addition to Macs, Apple is working toward using more in-house components in iPhones. This month, Bloomberg reported the company would begin swapping telecom chips and smartphone screens from companies like Qualcomm and Samsung for custom-designed ones within the next two years.  

By utilizing more in-house components, Apple is looking out for its long-term future, with the change likely to increase its operating income per product. As a result, the company can potentially sell fewer products in the event of an economic downturn but keep revenue high. 

2. Disney

After a challenging 2022, Disney has started the new year with a bang as its stock has soared more than 19% since Jan. 1. A box office hit with Avatar: The Way of Water and Netflix‘s news that it added 7.7 million subscribers last quarter has investors feeling bullish over the House of Mouse’s prospects.

The company was hit hard in recent years, with pandemic closures in 2020 and 2021 wiping out revenue from theme parks and movie theaters. Disney used the downtime to expand its streaming presence with the launch of Disney+, but that has also been a costly venture.

In its most recent quarter, the company’s parks revenue soared 36% year over year to $7.4 billion, and operating income shot up over 100% as reopenings welcomed guests back in droves. However, Disney’s media and entertainment segment disappointed, with revenue falling 3% to $12.7 billion and operating income plunging 91% to $83 million after a hefty investment in streaming content. As a result, signs that media earnings may be improving this year made investors more optimistic about Disney’s future. 

Moreover, Disney’s challenges over the last few years have been detrimental to its long-term stock growth, with its shares down 6% over the last five years. Compared to Apple’s over 200% stock growth in the same period, it’s clear which has been the more reliable investment. 

This year marks 100 years since Disney’s founding, with the company the undeniable king of entertainment in nearly any form. However, its performance in an economic downturn over the last year and its price-to-earnings ratio of 60 compared to Apple’s 22 make Disney a questionable choice. Apple’s consistent stock growth and plans to safeguard its business over the long term by using more in-house components make its stock the better buy in 2023. 

 

Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Intel, Netflix, Qualcomm, and Walt Disney. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, long January 2024 $145 calls on Walt Disney, long January 2025 $45 calls on Intel, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, short January 2025 $45 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.



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