If I could only buy 1 stock in the last half of 2024, I would choose this one

After a short dive that began in the second half of July, S&P 500 he bounced back quickly and is now flirting with a new record. Investors looking to put some money to work may be discouraged as they believe there aren’t many compelling opportunities in the current market.

But this is the wrong perspective. In fact, I think a company looks like a no-brainer portfolio addition at this point.

If I could buy just one stock in the last half of 2024, I would Walt Disney (DIS 0.64%). Here’s why.

Disney’s transition

One of the most notable secular changes that took place in the economy was the Ascension streaming entertainment at the expense of traditional cable television. The monster success of Netflix propelled this change. Now, Disney is in the midst of a major transition to its business model.

The company’s once-thriving linear networks, such as ABC and ESPN, still generate plenty of profits. However, they are in secular decline as more households cut the cord. Consequently, revenues will remain under pressure here.

At the same time, to keep up with the changing industry, Disney has had to invest aggressively in technology and content to grow its streaming operations, which include Disney+, Hulu and ESPN+. Direct-to-consumer (DTC) services have so far posted billions in operating losses, which is a key factor that has weighed on the stock.

Disney’s latest financial update, however, reveals solid improvements in the DTC segment. Combined, the streaming services generated positive operating income of $47 million in the third quarter of fiscal 2024 (ended June 29). It’s not something to say, but the executives believe that the company will improve in this area in the future.

However, it is not all encouraging news. The experiences segment, which includes results for parks, cruises and consumer products, faces some challenges. Revenue rose just 2% in Q3 and operating income fell 3%. “The moderation in demand we saw in our domestic business in Q3 could have an impact on the next few quarters,” the press release said.

I will take a more optimistic view on the long term. My view is that the experiences segment is a profitable one that is critical to Disney’s competitive position. That’s what the company is for plans to invest $60 billion over the next decade to strengthen its offerings here, bolstering my confidence that the segment will be stronger in the future.

Disney rating

The market hates uncertainty. That’s the best word to describe Disney’s situation over the past few years as the media landscape shifts to streaming.

As a result, Disney stock is cheap. They trade at a the forward price-earnings ratio (P/E) ratio of 17, based on estimated fiscal 2025 earnings per share. If you believe the bottom line will expand significantly in the coming years, as I do, then the valuation will become more attractive the further you look. For what it’s worth, the S&P 500 trades at a forward P/E multiple of over 23, so Disney is taking a significant discount to the overall market.

In my opinion, that valuation creates a wonderful opportunity to buy the stock. Investors can purchase a business that has a economic moat which deters entry of new entrants and adds long-term sustainability.

Disney intellectual propertyincluding its characters, stories and franchises, many of which were created decades ago, hold a special place in the minds and hearts of consumers around the globe. I think it’s impossible for any business to match or replace that kind of position.

Of course, investors looking to buy stocks must be patient to wait for solid improvements, especially on the prospect that earnings will rise. However, I believe that over the next three to five years, Disney will prove to be a successful investment.