Dollar's decline is magical for Disney

Thanks to another rate cut from the Fed, America is on sale, and one of the biggest beneficiaries is likely to be Walt Disney & Co.

Lower interest rates mean additional downward pressure on the already battered dollar, which makes travel to the United States a bargain for foreigners.  Where are those tourists likely to visit when they come flush with euros and yen?  You guessed it -- Disney. Las Vegas might see some increased tourism, as will major metropolitan areas like New York and Chicago, but you can bet your devalued dollar that the Magic Kingdom will be a top destination.

Not only will Disney's theme parks draw more foreigners, but Americans unable to afford trips to Paris, Rome or Tokyo because of the shrinking dollar are also likely to stay in the U.S.  That's right mom and dad, this is the year to suck it up and take the kiddies to Disney.  Parents check out the Disney blog for travel ideas and plans for navigating the parks.

Though revenue from the overseas theme parks might slip due to a drop in visitation (what with all the foreigners taking advantage of cheap travel to the States), the company will benefit from the currency conversion.  For Disney the cheap dollar is a win-win proposition.

Of course theme parks make up only about 30% of total company revenues.  There's also the film business.  Here again the house the mouse built is ready to roar.  In addition to the surprising box-office success of The Game Plan, Disney is set to release two films sure to be box office hits: Enchanted and National Treasure: The Book of Secrets.  Then, just in time for the holiday shopping season, Disney is releasing the DVD versions of Ratatouille and Pirates of the Caribbean at World's End. With the economy slowing, DVD rentals and movie attendance should be up and Disney is well positioned to capture a large share of both markets.

Toss in the ongoing success of ESPN and ABC hits such as Desperate Housewives, Grey's Anatomy, Dancing with the Stars, Lost and Private Practice, and you would have to be goofy not to like the earnings outlook for the entertainment giant.  Analysts currently expect Disney to post earnings of $2.12 in fiscal year 2008, which means that the theme park isn't the only bargain.  At about 16 times next year's earnings, Disney trades at a steep discount to the S&P 500 -- despite superior growth.

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