If you watched the market today you know it took another hit. I was hoping to buy TCS yesterday when it dropped but I acted too slowly and missed my opportunity. Today as the market started to slip I decided to look at a stock that has been climbing faster than any other stock since the beginning of the new year. Netflix (NFLX) has been defying the odds for years and every time an analysis claims it will drop, it climbs.
The chart above shows the price year-to-date (YTD). As you can see, it started close to $200 and has climbed as high as $286, more than 40% since the beginning of the year! I wanted to get some shares but not when the stock was on its way up, I like to buy when the stock is dropping and sell when the stock is gaining. This was finally my opportunity to buy.
Large, powerful companies like Apple (APPL), Amazon, (AMZN), Facebook (FB) and Google (GOOG) don’t play by the same rules that relatively smaller companies like Rite-Aid (RAD) and United Airlines (UAL) do when it comes to stock price. We have looked at PE ratios to buy the smaller ones; these larger ones are harder to judge. So for NFLX we are speculating about future earning and its ability to continue its market domination.
We are a Netflix family and know first hand that they are constantly producing new content and are on the cutting edge of streaming technology. Years ago, many predicted the demise of Netflix when they decided to separate their DVD mail service from their streaming service. Today, I don’t know anyone who still uses the DVD service, Netflix was able to predict the future and has grown tremendously since then. Every time I heard about another major innovation, I saw their price rise so quickly I thought there was no room left to grow. Since buying Amazon (AMZN), its price has risen 40%, I believe that NFLX has the same potential and this market correction is the best buying opportunity I have seen in a while.
Both of the following transactions took place in my E*Trade Brokerage account:
I bought 5 shares of NFLX for $260.00 each, total cost of $1,306.95
I received $49.20 dividend paid in cash from the LOW stock