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Disney (NYSE:DIS) shares are up 5% to $34.30 since a bullish cover story in late February. Barron's Michael Santoli thinks the stock is still underappreciated.

It has by far the best brands in media, the strongest balance sheet, the finest international growth opportunities and the best-developed process for cross-selling its characters and content. Yet the stock garners no premium over its large peers.

  • Investors continue to focus on perceived softness in theme-park visits. Besides the fact that Disney is not only about theme parks, park attendance and bookings continue to surprise to the upside.
  • Cablevision Systems (NYSE:CVC) paid over 20x estimated cash flow for Sundance; Disney's far more successful ESPN and Disney Channel trade at an implicit 10x.
  • Shares trade at just 14.8 12-month forward expectations due to its recent outperformance and rising forecasts.
  • Upcoming Pixar film WALL-E could surprise to the upside, considering no one seems to expect much from it.
  • Disney is among the lowest volatility stocks in the Dow.

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From Disney's May 6 earnings conference call:

We’ve seen in the last few years a demographic expansion among videogame consumers to basically include younger kids as well as more girls than we saw years back. And that’s a great benefit to Disney, and part of that is due to the success of the Nintendo platforms, both the DS and the Wii. So the Disney name, Disney brand and the products that we are essentially tapping into to make videogames are playing very well on these new platforms across demographics that we would have not seen three, four, five years ago. -- CEO Robert Iger

In a post-earnings interview with CNBC's Julia Boorstin, Bob Iger speaks about Disney's past successes and future plans. He notes digital revenue account for about $2B of Disney's $35B total, but thinks some traditional media firms have it wrong: It's not about a new revenue stream, he says, it's about giving consumers more options about how and where to consume Disney content.

Source: Disney: Close to Invincible - Barron's