Netflix (NFLX) has gone from $67 to $235 in during the past year. It’s a great company and a stock we should own, but NFLX has gone on a tear and a correction would bring a flood of profit takers, possibly pushing the stock down 30-40%.
Ten-Year Chart
I normally start out a Stocks on the Radar article with the company’s one-year chart. Netflix’s ten-year chart gives a better view of how far the stock’s already run. This week Investors Business Daily even mentioned NFLX broke out five times already, usually great stocks have three breakouts to ride before the stock collapses.
This ten-year chart makes the stock look very dangerous to buy right now. It’s made a parabolic move higher.
If you are interested in viewing the one year chart is here. Profits are solid all around, P/E of 54 is high for new buyers. If you own NFLX already, I would hold it.
The earnings table is here. The company just beat by a healthy margin, Annual Profit Estimatesjumped higher, and quarterly estimates not only look great but just increased as well. Overall this is a solid investment — if the charts will alow it.
Fair Value
Last quarter I put NFLX’s Fair Value P/E at 40, now I bumped it to 45. With that in mind the stock is worth around $200.
Since NFLX just increased estimates, these fair values could prove to be conservative.
Bottom Line
The numbers look great, this is definitely a stock for me. But I missed the boat so far and its safe to say all stocks have pullbacks and corrections, I just hope NFLX give me one soon.
