For 2022, my top contrarian pick in the Dow Industrials is Walt Disney (DIS). The stock was the worst-performing stock in the Dow in 2021, observes Chuck Carlson, dividend reinvestment specialist and editor of DRIP Investor.
Disney has been hurt by a litany of problems:
- Wall Street has soured on these shares a bit due to a slowdown in growth in the company’s streaming business.
- Media and entertainment stocks have been out of favor on Wall Street, as investors seem concerned about the lingering impact of Covid on operations.
- Wall Street seems underwhelmed by the company’s relatively new CEO, Bob Chapek. In fact, rumors are starting to surface that Robert Iger, the former CEO, could be coming back to run the company. Admittedly, I am skeptical that you’ll see such a move, but the fact that these rumors are being floated indicates that folks aren’t sold on Chapek.
To be sure, while the last year has been a bit unfriendly to investors, Disney still has a lot in its favor, such as strong brands and an enviable ability to monetize its various content and entertainment assets. Theme parks and resorts are clearly on a recovery path that should continue in 2022.
And the company’s filmed entertainment business should strengthen as more people return to the theaters. And the company’s streaming business, which was bound to see a growth slowdown after its supercharged start, represents a significant growth avenue for the long term.
Taken all together, Disney still offers a lot to like for investors who are willing to look past some of the near-term headwinds. I think the stock is set up for a nice rebound in 2022 and regard it as a high-quality contrarian pick.
Please note Disney offers a direct-purchase plan whereby any investor may buy the first share and every share directly from the company. Minimum initial investment is $200. The firm will waive the minimum if an investor agrees to automatic investment via electronic debit of a bank account of at least $50. The plan administrator is Computershare (www.computershare.com).