Looking for $20 bucks? Here’s your trade on Netflix (NFLX) (June 13, 2018)
NFLX
I want to look at Netflix ( NASDAQ: NFLX ) today and here is why: This is kind of a trading call, nothing really more than that. I think you have got another $20.00 in this stock, at least, that would be my minimum thing. I just look at this; the stock is really expensive from a fundamental standpoint as far as the way the Street looks at things.
I look at it a little bit differently, it is not particularly unique it is just a different way of looking at it. I look at growth; I look at revenue growth and sales growth. This stock is kind of a monster stock so I am not scared here and I don’t think too many other people are either. Even though the stock is up over 4 percent today this is a stock that works. The earnings are really, really solid, like really solid. The earnings per share (EPS), the growth rate of the earnings per share over the last three years, it averages 61 percent.
The sales growth, the revenue is 30 percent so this is a really strong company fundamentally. I think that people just don’t give a rip about the fundamentals. Is it expensive? I hear people talk about chasing the multiple and all that. Look, this is a really, really super expensive company. Amazon ( NASDAQ: AMZN ) has been expensive for 20 years. I think you can buy Netflix ( NASDAQ: NFLX ) even right here, right now.
My suggestion would be, take a position such that even if the stock pulled all the way back to the 50-day moving average you would still be okay with it. Ultimately, it is going to hit the 50-day moving average I just don’t think it will hit it here. I think ultimately it will hit the 50-day moving average, at some point in the future at higher prices. So you can take some of this stock literally right here right now. And then put a stop on half of your position maybe below 360.00 or just below today’s intraday low of 364.00. So you put a stop on half of your position right there and then keep a much looser stop on the other half clear down here.
That is how you can really get in and participate in Netflix ( NASDAQ: NFLX ) even though this thing is still running. This is where the breakout was, 340.00. So you just look at 280.00 and 340.00 and that is 60 points, just cocktail napkin measured move; 280.00, 340.00, that is 60.00; 340.00 plus 60.00 is 400.00. That is why I am saying you have got another 20 points in this stock, almost as much as I hate to say it, almost guaranteed over the next couple weeks. That would be my bet. But again, almost guaranteed. I don’t guarantee anything except the fact that you darn well better be using good risk management or the other guarantee will be you are not going to be trading for very long.
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