A five-year performance chart of Walt Disney Co. (NYSE: DIS) stock follows a trajectory similar to the 80-foot incline on the company's famous Matterhorn roller coaster. But unlike the popular bobsled ride at Disneyland, there's been no downhill to speak of.
Indeed, the quadrupling of Disney shares over the past five years has created some of 'The Happiest Investors on Earth.' But its the original believers who bought shares early at dirt cheap prices and never looked back that are the happiest. For them, the more than 44,000% growth over 50 years is a fairy tale come true.
With a foothold in everything from major sports networks (like ESPN) to global amusement parks to branded toys and stores across the world, Disney just keeps dreaming, innovating and entertaining. Some upcoming previews include:
- Teaming up with Netflix (Nasdaq: NFLX) to produce original TV series featuring four of Marvel's most popular characters in 2015. We're talking about at least four, 13-episode series with Daredevil, Jessica Jones, Iron Fist and Luke Cage. Very cool.
- Releasing its next Pixar films, The Good Dinosaur in November 2015 and Finding Dory in June 2016. Like most Pixar movies, these films should draw huge audiences. For example, this summer's Monsters University grossed over $730 million worldwide.
- And preparing to shoot the next installment of the iconic Star Wars saga. After acquiring the rights last year, the company just announced the cast for Star Wars VII, scheduled to debut on December 18, 2015.
While Disney's final story has yet to be told, another chapter of five-digit growth may not be realistic. But there is another theme park company you've likely never heard of that could be just as magical for early followers.
Merlin Entertainments (OTC: MIINF) is fresh off an IPO, an upgrade by Moody's, and is ranked second only to Disney in number of visitors per year. Formed in 1999, the number of visitors to its parks has grown by 11% a year since 2008.
The 15-year-old UK-based company trades on the London Stock Exchange (MERL.L) after its IPO generated $1.5 billion, and it recently made its debut as an OTC stock (MIINF) on February 14.
With 100 operations in 22 countries and nearly 60 million visitors in 2013, some investors fear that Merlin has peaked and is ready to come sliding down. I beg to differ -- not with a wealth of popular attractions all over the globe and at least 100 more on the drawing board.
Its current inventory consists of the Legoland resorts/theme parks in California and Florida, Legoland discovery centers in several other cities, as well as the Madame Tussaud's celebrity wax museums in New York, Washington, D.C., Las Vegas, and Hollywood.
With revenue totaling $1.3 billion in 2013 (up from $769 million four years ago) and profits compounding at a 12% annual growth rate, Merlin's fundamentals are looking strong.
And there's plenty on the horizon, like opening Madame Tussauds in Shanghai, Prague and Jakarta next year, and Legolands in Japan and South Korea.
In addition, it recently began building a saltwater aquarium at Great Lakes Crossing Outlets in Auburn Hills, Michigan. This is Merlin's seventh Sea Life Center to open in the U.S. and will include a large tropical ocean tank and walk-through underwater tunnel featuring saltwater creatures like shrimp, starfish, seahorses, sharks and rays, along with some aquatic creatures associated with the Great Lakes region. It is slated to open in May 2015.
If SeaWorld loses its battle with the State of California to keep Shamu and other killer whales in its most popular shows, the aquarium arena could prove even more lucrative for Merlin.
It operates a Sea Life aquarium at Legoland -- just up the California coast from SeaWorld -- at the Mall of America in Minneapolis, as well as in Tempe, Kansas City, Dallas/Fort Worth, and Charlotte.
Moody's likes what it sees with Merlin, too, based on a recent upgrade on a number of factors, including its strong rate of growth, a high cash balance ending FY 2013, a net decrease in debt, and Merlin's intention to initiate a dividend policy of 35% to 40% of net income.
If, or when times get tough, the company has the backing of private equity firms Blackstone Group LP (NYSE: BX), CVC Capital Partners Ltd. and Lego Group owner Kirkbi A/S.
Though the stock has been flat as a pancake over the past three months, it is sure to garner more attention and confidence from investors as it follows in Disney's footsteps.
Action to Take --> Shares of MIINF currently trade around $5.84 Over the Counter (OTC). That's a 1% drop from its IPO price, so this is an attractive entry point considering the company's growth potential.
