California is massive, both in terms of population and economic power — it is the largest U.S. state when measured by residents and gross domestic product (GDP). Since it places No. 1 in both metrics, it’s also a suitable home to a dizzying number of world-beating companies in fields as diverse as technology, pharmaceuticals, and industrials.
Yet, it’s another sector traditionally identified with the Golden State that would be my pick for Golden Stock now and for the future. Read on to learn more about this quintessentially Californian favorite.
The one industry I purposely left out of the introduction above is entertainment. Yes, that business is no longer intensely concentrated in Los Angeles, but the city and its environs still contain its core. It’s there (specifically, in the L.A.-adjacent city of Burbank) where we find the current king of the industry: Walt Disney (NYSE: DIS).
I say “current” because a new behemoth might be in the making; large but struggling rival Warner Bros Discovery is soliciting bids for a new owner, and a leading suitor is Paramount Skydance. Both companies, by the way, are the current iterations of film enterprises that have long and distinguished histories — much like Disney.
What they don’t have, and won’t have even in combination, is the unbeatable collection of entertainment assets that Disney has built or acquired over the years.
In addition to its ever-active film studio and distributor, Disney owns one of the three legacy terrestrial TV networks (ABC), a set of video streaming services that flipped into profitability in 2024, and top sports broadcaster ESPN, not to mention that superhero movie franchise spawningground, Marvel.
And that’s just several of the top holdings in the company’s film and TV business. Its parks, experiences, and products division not only encompasses world-beating theme parks and their flood of themed merchandise, but it’s also home to clever and sensible brand extensions that are producing growth, such as Disney Cruise Line.
The entertainment business is fickle, so the success of Disney’s businesses can ebb and flow with shifts in consumer tastes, including preferences for movies, toys, and travel habits. That said, the company’s sheer variety ensures that at least a few operations will, at any point, be rising to help offset stagnation and/or decline elsewhere.
These days, Disney’s direct-to-consumer (DTC) operations centered on Disney+ are an important business delivering the goods. Within that recent profitability streak, DTC on its own has produced quarterly operating income ranging from $253 million to $352 million.
Zooming out some, in its fiscal 2025, these growth sources helped lift Disney’s overall revenue yet again; it crept up by 3% from the previous year’s tally to $94.4 billion. Thanks to the performance of those profit makers, net income not according to generally accepted accounting practices (GAAP) popped by 13% to $11.3 billion. That makes for a chunky net margin of 12%.
Meanwhile, free cash flow — the well from which springs the semiannual dividend Disney reinstated in late 2023 — is accumulating nicely. In the just-completed fiscal year alone, it jumped by 18% to slightly over $10 billion. Its encouraging rise over the years has helped the company raise the shareholder payout from the reinstatement amount of $0.30 per share to the current $0.75.
By owning Disney, an investor gains a stake in a business that is not only top in its class but also boasts numerous present and future sources of growth.
For example, Marvel movies might be losing some of their mojo these days, but a more recent acquisition — the Predator sci-fi franchise — scored big with the recent Predator: Badlands film. In fact, it was the No. 1 movie in terms of U.S. ticket sales during its November opening weekend, collecting more than $40 million in gross receipts.
Meanwhile, the company’s streamers, such as Disney+, continue to add subscribers, and another park is set to open its doors in Abu Dhabi in the near future.
Analysts following Disney are fully expecting Walt’s steam train to keep rolling down the growth track. Fiscal 2026 revenue is expected to rise by 5% over the 2025 tally, accompanied by a 9% improvement in per-share net income. Those are high numbers for a company of such scale, scope, and established presence.
I doubt very much they’ll be the final positive figures from the Mouse. This is a company that continues to have vast potential, with a future that looks as sunny as a warm California day. This is definitely a stock to own for a very, very long time.
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Eric Volkman has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
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