"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.
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Reader Comments (Page 1 of 1)
2-18-2009 @ 1:46PM
Raghu said...
Netflixers who are wondering if they're getting their money's worth from their subscription can just use FeedFlix.com
2-18-2009 @ 2:15PM
ryan said...
I love NetFlix. I really think this is one company that is going to succeed in this economy as consumer spending decreases. NFLX not only has proven themselves to be profitable in the past two quarters, but has a growing subscription base, bullish sentiment ( http://www.predictwallstreet.com/forecast.aspx?symbol=NFLX ) and even though they are down today, I think investors will continue to be optimistic about this company.
2-18-2009 @ 4:26PM
Kent said...
NetFlix has certainly changed the DVD rental business and give the founders a lot of credit in putting their vision into practice. The other competitor, Red Box, deserves credit also which is a cash-flow generator for MCD. I recently reduced my going to BlockBuster when they are charging nearly $5 per copy.