admin 17 March 2009 Featured No Comment

“There are always stocks that can buck the trend and go up when most others are going down; one such issue is Netflix (NASDAQ: NFLX),” says Sean Broderick. In Money and Markets, he explains, “Netflix has exceptional growth prospects as it ventures into streaming movies and games over the Internet.” Here’s the advisor’s review.

“Netflix is doing bang-up business, and if history is any guide, should continue to do so. During the Great Depression, movies were one of the few growth industries, as a weary world turned to escapist entertainment.

“Netflix had an excellent recent quarter. Revenues jumped 19% and earnings rose 58%. EBITA, a widely used measure of a company’s efficiency and profitability, hit a six-year high, and was up 18% over the year earlier.

“The bottom line is that the company’s bottom line is getting healthier all the time. Netflix has increased its customer base to approximately 10 million subscribers, a third more than it had at the end of 2007.

“Looking down the road, Netflix is expected to control 32% of the video rental market by next year. The company has forecasted that its subscriber base will top 11.3 million by the end of 2009.

“Netflix has exceptional growth prospects as it ventures into streaming movies and games over the Internet. It now provides content to subscribers over the Web and is increasing its distribution through other delivery partners.

“In a press release with Microsoft, Netflix announced that in the three months through December, it has streamed 1.5 billion minutes worth of video to the Xbox 360 console and approximately 1 million Xbox Live Gold Members. This is big considering the time period and the limited subscriber base.

“Through strategic partnerships, Netflix’s streaming video can be delivered to subscribers through Blu-ray players, broadband-enabled TVs and Roku set-top boxes.

“These recent initiatives show the potential size of the streaming market, as Microsoft has sold more Xbox 360 consoles than all these delivery systems combined.

“Since the technology is available and the profit margins are higher, the company is looking at the possibility of terminating postal delivery and delivering videos only over the Internet.

“Netflix is poised to take advantage of the expanding broadband market and delivery of new streaming services over the Internet.

“The company’s ability to provide these services is head and shoulders above both Blockbuster and Amazon.com. Like it was with mail order rentals, Netflix is on the forefront of the video-streaming business.

“Technically, the stock’s chart looks great. It is coming up to important overhead resistance in the $40 area. If it fails here, it could easily go down. But if it breaks out, my upside target would be $62.50 — a 60% move higher from recent prices.”