Why Buy Netflix? (NFLX)

Markets were up across the board in trading today. The Dow added 217 points and closed the day at 17,141.75. The NASDAQ gained 87.25 points, leading the day in gains, and closing at 4,870.10. The S&P 500 was also up, adding 29.62 points to close out the trading day at 2,023.86.

Garmin (GRMN) Down Big on Leaked Earnings

A leaked earnings report shows that Garmin (GRMN) Technologies took a beating last quarter. Sales are anemic, and the company isn’t moving into new markets.
In fact, it’s struggling in its old niche -- GPS systems -- which have become commoditized to such a degree that Garmin got lost in the shuffle. Although the company has some new tech coming out, the fact is that it’s a generation behind its competitors. And that’s why Garmin dropped so hard today, losing 12.66% in trading today and closing at $32.28 per share.

Why Buy Netflix? (NFLX)

Considering that the stocks is down 63% on the year, why on Earth would anyone buy shares of Netflix (NFLX)? And, maybe more importantly, why would analysts still rate this stock a strong buy? The answer is that Netflix is one of the best examples of a market disruptor that we’ve seen since Apple (AAPL) released the iPhone and modernized the mobile market. Netflix delivers content in an entirely new way, and adoption rates are only going to grow.

Technologies like Netflix and the iPhone circle the globe and disrupt existing markets to such a degree that they essentially become forces unto themselves. The question isn’t whether or not Netflix will grow, it’s how fast it will grow and where it will pop up next. These so-called disruptive technologies are hot commodities for traders, and investors that get onboard early tend to really clean up for a relatively small amount upfront.

So, even though the company is down 60% on the year, it’s positioned so well for growth that all of the analysts you’re likely to talk to rate it a strong buy. It’s all about the future with disruptive technologies, moreso than with old standbys like General Motors (GM) and 3M (MMM). The reason you should buy Netflix is because it’s sweeping the globe, essentially revolutionizing television for the internet age.

It’s bigger than its IPO and market valuation, and even bigger to some extent than the current CEO and senior management. It’s all about market positioning, and Netflix is one of the best-positioned stocks to make a killing in the long run.
Published on Oct 15, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2020. Content published with author's permission.

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