Netflix Inc. (NFLX)

In terms of the chart and price action, this has been more than impressive, but looking at valuations, he has a mixed view. This is a stock that is trading at almost 100X forward earnings, albeit it does have a 30%-40% expected growth rate, which still gives it a 2.4X PEG ratio, a little rich for him. Feels a breakthrough in China is still elusive to them. Expansion in international markets hasn’t been that profitable. There is still potential for serious competition from places like Amazon, Google and HBO.

You can’t argue with the success of the share price on this. It continues to move higher. For portfolio managers that look at metrics, it has been a tough go, because the shares continue to trade very high in terms of multiples and valuations. Trading at nearly 90X forward PE ratio. It has a very strong growth rate of about 35%, but still, that puts it at 2.5X PEG ratio. Difficult to own this name when there are lots of other technology names that you can own at lower multiples. One challenge is that content costs are high.

Trading at 130X forward PE, a very high ratio. It has a great long-term growth rate of 35% for earnings. It is difficult for him to consider this name for a value or GARP name. However, global subscribers are growing, and he expects them to reach 99 million by the end of Q1. However, costs are swelling, because they continually need to increase their original content. There is also competition.

(A Top Pick Dec 10/15. Down 163%.) Bull Put Spread. He had been trying to show different examples of how you could play strategies from both sides of the play.

This is pricey in terms of a PE multiple, trading at nearly 300X on a forward earnings basis. However, they’ve got great growth and exciting things are happening with them. Doing very well going to the international market, not so much in China. They are going to reach about 92 million subscribers internationally. Their costs are swelling, because they have to get a lot of original content, which is going to be a headwind for them. He views this as more of a trading stock than anything.

It was a blow out quarter when people were worried about it. Subscription growth was impressive. There are lots of different options out there, but this is the coming trend. The movement is away from cable. They really haven’t made any money to date.

It is one of the ’FANG’ group. They are all in an uptrend except for NFLX-Q. It seems to be breaking resistance and breaking the downtrend so it looks good technically.

It does not pay a dividend so he cannot own it. It sold off because they disappointed the market in terms of new subscribers. The reasons to own the stock are still the same.

Since the early part of this year, this has stayed in a very, very narrow range bound type of market. Its current range seems to be $80-$85-$100. Subscriber growth is getting to be a little less than what was expected. A lot of the grandfathering that went on with pricing, is now being un-grandfathered. There is a lot of competition in the streaming area. Trading at a pretty high valuation, and you have to be careful of paying these types of multiples for a company like this. On a forward PE basis, you are paying 200X earnings. Growth is expected to be 33%, and what if the competition heats up a bit more.

(Market Call Minute.) She is Short this stock.

Just bought some today. Expectations had been and are high. The street was looking for $2.1 billion in revenue, and it only delivered $1.5 billion, but the earnings was a beat. They expect to put on 300,000 subscribers in the next quarter. There are lots of reasons for the drop of 13% and it was warranted. However, they do have about 600 hours of original programming scheduled in the next 6 months.

(Market Call Minute.) Lots of competition out there and lots of competition coming, especially from Amazon (AMZN-Q). Lofty valuations.

(A Top Pick Feb 19/16. Up 13.76%.) It looks good, and it is getting more and more popular. It is much better quality than it was. $120 would concern him, and wouldn’t want to see it break down through $90.

This was one of the driving forces behind the upgrade in content on TV and they did really well. From his perspective, it looks good. Trading strongly and has come off the bottom. Because the stock had such a huge run last year, it probably needs some time to work that off, and might become investable again. If you are nervous, this is the kind of name that you could trim back for now, and then on a break out go back in.

Trades at an amazingly large valuation. It went to crazy astronomical valuations based on growth. They pursued international expansion and have grown subscribers that way as well. To remain competitive, they’ve had to invest in content, which is exceptionally difficult, so it becomes no different than a movie company, a risky proposition. They say they are making money, but what they don’t tell you is that they invest a huge amount of money, capitalize a bunch of expenses, and slowly write off those costs against some accountant’s view of how long they are going to be able to earn a revenue stream off that.