TheStreet.com’s Action Alerts Plus team offered negative comments on one blue-chip stock and positive comments on another June 23.
The negative remarks concerned Walt Disney Co. (DIS) – Get The Walt Disney Company Report. “Breaking that $100 level just a couple of weeks ago was a red flag for me,” said AAP co-portfolio manager Bob Lang.
Disney shares closed at $94.30 Thursday, up 0.86%. The stock is down 39% so far this year.
“Here’s a stock that is a good high quality name. It’s a golden franchise name,” Lang said. “And they’re not going anywhere.”
That’s a problem in an environment like this. “People don’t want to be long in stocks that are relying on the consumer, when we’re heading for an economic slowdown,” Lang said. “And unfortunately, Disney is right in the crosshairs of that situation.”
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Verizon’s Sticky Service
The bullish commentary concerned Verizon (VZ) – Get Verizon Communications Inc. Report. “It has all the characteristics that we like,” said Chris Versace, AAP’s other co-portfolio manager.
A defensive investment stance makes sense now, “given the continued pressures that we’re seeing both on the inflation front and the slowing economy,” he said.
“With Verizon, you have a very inelastic business model. If you think that people are going to cut their mobile service, odds are they aren’t…. So we see that service as extremely sticky.”
Further, “the company has the ability to pass through price increases, and they have a new one going into effect in some parts of their business today,” Versace said.
“That means we should be seeing earnings expectations tick higher, but it’s really the dividend paying aspect of the business. … [You] get paid while we wait for the market to eventually find its footing.” Verizon has a 5% dividend.
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