Netflix Inc. (NFLX)

Valuation has always been the Achilles hill for him on this type of companies. Trading at 100 times forward earnings with 44% growth rate. But what if there is more competition? What happens to this growth rate? 125 M subscribers worldwide. More now outside the US than in the US. The profitability of the international market is questionable. They are negative net cash flow.

Short put. Write a September $300 put. You're obligated to buy at the strike price. If it doesn't get down to $300, then the option expires worthless and keep the $22/share (it closed at $322 today). Put cash aside or have credit on the side to buy the to stock. This is way to play NFLX on a pullback.

He wishes he owned it. There is some competition, e.g. AMZN-Q. NFLX-Q has an amazing business model and they are profitable. He can't get in as a value investor. They have done a great job, though.

He always thought it was too expensive and even today he feels that way. It had a great earnings report this week with record new subscriber rates. Trades at 70 times next year earnings.

Never own it. What prevented him from buying it is the valuation trading at about 107 times earnings. The amount of content spending concerns him as well. Disney (DIS-N) is pulling their content out.

Discipline is more important than chasing really high valuation stocks. It is in the bottom 2% on valuation and yet in the top 1% on momentum.

Still believes in it. It was the first streaming company and continues to improve while it expands globally. Its content continues to improve too. He loves HBO, for example, but Netflix is improving more. Comcast and Disney are fighting for market share, but Netflix is still winning. Add to your position.

Short Netflix? Shorting can be highly damaging. This stock is too expensive, despite being a fabulous success that has redefined movie-watching and Netflix is a great model. Instead, invest in DY-N who are re-cabling America for 1G technology.

Likes it technically, probably overbought now though. Expects more subscribers this year globally, but worries about weakened profitability. Content spending has jumped to $8 billion so they're burning money, and there's more competition coming, particularly from Disney. Valuation and PE are too rich for him. They should continue making their own content to attract subscribers.

Incredible company. Resilient during the recent pullback. In 190 countries and subscriptions up 25%. Has room to grow and gain even more subscribers. Lots of growth ahead. Doesn't listen to the naysayers who say they're spending too much on content. He doesn't know anybody who doesn't watch Netflix in a big way. (Analyst’s price target is $263.77.)

Amazon (AMZN-Q) or Netflix (NFLX-Q)? Doesn't own either. Prefers Disney (DIS-N) as their pending purchase of 21st-Century Fox is going to remove the shackles and people are going to stop thinking of it as a cord cutting situation with lower subscriber participation, but more in terms of a streaming competitor to these 2. (See Top Picks.)

It has one of the best price momentums in the S&P but the valuation is out of this world. It has a lot of takeout multiple built into it. But it is one of the FANG stocks. This is part of the Euphoric trade that he worries about.

There are 1.5 billion TVs globally, and there are 1.2 billion cable connections. This company has about 100 million subscribers and has 1st mover advantage. Their cash flow is long to produce the shows, and get ahead of everybody else, and catching them is going to be very difficult. (Analysts' price target is $225.)

There is competition coming from HBO, Disney and even Amazon. You can’t argue with this company’s chart. Hasn’t participated in this because of the valuations, which are still up at 72X Forward Earnings. There is a 40% estimated growth rate, but that still gives it a 1.8X PEG ratio, so it is expensive. This is in the consumer space and he would prefer other areas.

It is a great company. He just does not see how they can grow into their valuation and make money for shareholders. He would have said the same thing last year. Yet their subscriber numbers continue to grow. It is not growth at a reasonable price. AAPL-Q is at 15 times earnings and 12 if you take the cash off the balance sheet. AAPL-Q is still his number one holding in his portfolios.