"Our favorite current investment idea is Netflix (NASDAQ: NFLX)," says Michael Cintolo, editor of The Cabot Top Ten Report, which each week reviews ten issues that have been showing strong price momentum.
"Netflix bolted higher on a great earnings report last week, and impressively, followed through to the upside for a few days. Bad economic times seem to mean good news for Netflix, as an evening at home with a few DVDs is way easier on the budget than even a bargain matinee at the Cineplex.
"That's the message of Netflix' boffo quarterly results that came out on January 26. Earnings walloped analysts' estimates and more than twice the predicted number of new subscribers signed up.
"Furthermore, CEO Reed Hastings has been pushing Netflix hard -- and successfully -- into the growing business of streaming movie rentals, which, while they don't earn additional revenue, do reduce mailing costs.
"With revenues up 19% and earnings up 58%, the company's bottom line is getting healthier all the time. There are still just 163 institutional investors signed on with Netflix, which leaves lots of room for expansion.
"NFLX, which had been consolidating and tightening up just above $30 for a couple of weeks, gapped up to $35 the day after the earnings report and soared toward $38 briefly.
"The stock relaxed a skosh to $36–37 before today, which looks like a likely range for a new consolidation. We think a buy at $36 is reasonable."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.