NEW YORK ( TheStreet) -- When I was a younger dad there was a fairly common gift-giving tradition that thrilled the recipients and the benefactor.If you wished upon a star that your child or grandchild would have a successful and financial secure future, you'd buy them at least one share of Walt Disney (DIS - Get Report) and take delivery of the colorful stock certificate. The certificate would be placed in a sturdy, glass-covered frame and hung on the child's bedroom wall.
As you can see, the quarterly revenue growth rate has subsided and so the stock is pulling back. The 200-day simple moving average of the stock price is slightly above $46, and there aren't enough reasons to believe the stock will correct that much. Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust -- enjoy advance notice of every trade, full access to the portfolio and deep coverage of the latest economic events and market movements. As I wrote in an article Thursday, "Now that the U.S. elections are behind us, the groundwork is being laid for some outstanding investment opportunities. As I write this the U.S. stock market is in freefall. Some hints of panic are in the air...A plethora of profitable companies and their stocks are offering some long-awaited 'bargain' pricing." One of those "bargain" stocks is the reigning monarch of entertainment and nostalgia that spans more than 3 generations. With trailing 12 months (TTM) operating cash flow of more than $8.5 billion and levered free cash flow (TTM) of over $3.5 billion, we are seeing the tip of the iceberg when it comes to earnings and revenue growth over the next quarter and well into 2013. This should not only help DIS sustain its current dividend of 60 cents per year, which represents a pay-out ratio of only around 20% of its earnings, but opens the way for dividend increases. CEO Bob Iger has mentioned he wants to see the company decrease its capital expenditures, perhaps hinting that paying shareholders a more generous yield on their investment is in the offing. There's plenty of competition for Disney's empire especially when it comes to television and revenue from broadcasting sporting events. The forward (one-year) PE ratio is approaching 15. When compared to competitors like News Corp (NWSA), with a forward PE slightly above 12, and Time Warner (TWX), with a forward PE also around 12, DIS may be overdue for a share price pullback. TWX, by the way, reported its earnings on Wednesday and they beat analysts' expectations on both earnings per share and revenue. TWX's $1.04 annual dividend produces a yield-to-price of almost twice that of Disney's current dividend (2.36% versus 1.2% for DIS). So as one of my mentors used to tell his clients, "get ready, get set, not yet." That may apply to when DIS will be oversold and ready for value-conscious investors. If you look at Disney's relative strength index it appears that DIS is approaching an oversold level. The very popular relative strength indicator is a momentum oscillator that compares the strength of gains against the strength of losses over a given period. RSI always ranges between 0 and 100. Values below 30 and above 70 are typically taken as oversold and overbought respectively. A strengthening RSI indicates that gains are tending to dominate losses. Once the RSI climbs above 70, however, the sustainability of the gains becomes more questionable. Right now DIS is drifting towards an RSI level that in the past preceded a rebound to significantly higher levels. As we watch the unfolding of this current stock market correction, we might recall that the fourth quarter of a year that includes a presidential election normally outperforms other quarters of the year. It won't be long until the stock market experiences an end-of-year rally. DIS should be a rewarding participant. At the time of publication the author had no position in any of the stocks mentioned. This article was written by an independent contributor, separate from TheStreet's regular news coverage. Jim Cramer's protege, Dave Peltier, finds you Stocks Under $10 picks with explosive upside potential. See what he's trading today with a 14-day FREE pass.