Should Disney buy MGM Holdings

4 stocks i would buy in the next crash

The stock market was not deterred by Corona. But the market could crash again if there is a second wave of corona and a lasting economic impact from the virus. Should this be the case, are Disney, MGM resorts (WKN: 880883), Virgin Galactic (NYSE: A2PTTF) and Vail Resorts (NASDAQ: CCN: 905285) the stocks I would add to my portfolio.

Disney

Few companies have taken it as hard as Disney. Amusement parks around the world have been closed and cinemas have also been paralyzed. As a result, nearly half of the company's businesses suffered.

But at the same time, Disney launched Disney +. And that could prove to be the future. As of the beginning of April, more than 50 million people have already subscribed to Disney +. That's an incredible number of subscribers to a new service, but it's only part of the company's streaming strategy. ESPN + and Hulu are also majority-owned by Disney and can be combined with Disney + to form a full streaming offering.

Streaming will continue to generate revenue during the pandemic. But the company will continue to thrive even if things go back to normal. Amusement parks are real magnets. And media are important assets, as well as movies, TV and streaming. Streaming provides a way forward for almost all Disney media content. In the long run, this is still a media giant. If it was available cheaper, it would be even better.

MGM resorts

Gambling could be one of the hardest hit sectors by the pandemic: casinos have had to close for months and it can take years for business to return to normal. But once the players come back, MGM resorts will thrive.

MGM owns some of the most valuable real estate in Las Vegas and Macau. The real estate is not only valuable, in Macau the company is one of only six concessionaires allowed to operate a casino. In 2019, these resorts generated $ 3.0 billion in EBITDA, a proxy for the cash flow that comes from the resorts.

MGM will no doubt have a tough year because of COVID-19. But if things normalize, this stock could be a bargain.

Virgin Galactic

My bet on the future is Virgin Galactic. The company builds spacecraft that will take normal people into space. Kind of an airline, but for those who have the need and the means to travel the world extremely quickly. A 12-hour flight from LA to Tokyo could be shortened to 2 hours thanks to Virgin Galactic.

The price is currently $ 250,000 per flight. But in a few decades it could become a normal mode of transport. Management expects 270 flights per year by 2023. As the number of flights increases, the costs are likely to decrease and the number of destinations to increase.

The disruption that is taking place in the economy today should, by and large, not be a problem for Virgin Galactic. The company serves the ultra-rich and has a long-term time horizon for its business model to grow. And with $ 419 million in cash on balance sheet and deposits from more than 400 employees, this is a growth stock that I hold long-term.

Vail Resorts

If Vail Resorts can survive next year, it will arguably be in a better position than it is today. I would then get on at an even cheaper price. The resort network has a strong competitive advantage. The company owns land and mountain resorts. 2020 is likely to be a bad year, but business will pick up as vacationers return.

I think this is also a company that will come through to next year. Facilities like restaurants and clubs may be closed in vacation spots, but outdoor skiing and snowboarding look a lot less risky.

Vail Resorts was able to generate net income of about $ 300 million a year prior to the pandemic. If we use that as a proxy for future earnings, I think the stock would be a steal below a $ 4.5 billion market cap. If the market crashes again and stocks hit $ 115, I'd get in.

Be ready anytime

The market can always go down or up. At the moment, I think there is too much optimism priced into the market. There is a great risk that Corona will come back violently again. Or that a recession is coming.

However, a crash is always an opportunity for long-term investors. As a real fool, I always keep an eye on these four.

The post 4 stocks I would buy in the next crash appeared first on The Motley Fool Germany.

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The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. and Walt Disney, and recommends Vail Resorts. Travis Hoium owns shares of Virgin Galactic Holdings Inc. and Walt Disney. This article was published on June 17th, 2020 on Fool.com and has been translated for our German readers.

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