Chances are, you're among the many to have missed out on the 250% rally in Netflix stock over the past year. That's OK. We can't all be Carl Icahn.
And you know what? We don't need to be to know that the markets for filmed and televised entertainment are changing. We already stream more than 1 billion hours of programming monthly via Netflix. YouTube, like Facebook, serves more than 1 billion users. All signs point to a lasting shift that's likely to benefit a variety of upstarts.
But which company is best positioned? How does Netflix stock compare to digital peers Amazon.com's Instant Video and Coinstar's Redbox. Here's what the number say:
Current Share Price
Trailing P/E Ratio
Cash From Operations
Sources: S&P Capital IQ, Yahoo! Finance.
And here's what Fools say, going by the data available in our CAPS investor intelligence database:
CAPS Stars (out of 5)
No. of CAPS Ratings
Bullish CAPS Ratings
Bearish CAPS Ratings
Source: Motley Fool CAPS.
Why does Coinstar get the highest rating of the three? "A single-digit EV/EBITDA and EV/FCF valuation makes this a steal," writes Foolish investor valuemagnet. " The decline of the DVD is not good for the core Redbox business, however, it is more detrimental to Redbox's competitors. I see this one outperforming, potentially becoming an acquisition candidate for a private equity player once again."
What to do now
Which of these stocks to buy has as much to do with the type of investor you are as the opportunity. Those looking for a diversified high-growth opportunity are more likely to gravitate to Amazon, which has even taken to delivering groceries. Coinstar and its lowball multiples are more likely to appeal to cheapskates such as valuemagnet.
And Netflix stock? I've found a place for it in my own portfolio, and I still like the opportunity. Hundreds of millions subscribe to some form of pay TV throughout the world. HBO has 100 million subscribers all by its lonesome. Each original program gets the company closer to becoming a network on the order of USA or perhaps SyFy, but with the added benefit of worldwide distribution. This is still a hypergrowth opportunity, I think, though at Netflix's current valuation, it could take years for new shareholders to realize gains. Nibble on weakness.
Do you agree? Let us know where you stand on the streaming opportunity, and whether you'd buy, sell, or short Netflix at current prices, using the comments box below.
Want even more information about how streaming is disrupting traditional television networks? The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities of investing in this hypergrowth opportunity. Click here to read the full report!
The article Netflix Stock: Here's How to Play It Now originally appeared on Fool.com.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. He was also long Jan. 2014 $50 Netflix call options. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Amazon.com, Facebook, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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