NFLX Stock: Buy the Dip in Netflix While You Still Can

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Netflix (NFLX) is once again making headlines this week, as news broke over the weekend that the company would not be renewing its contract with Epix. Epix (jointly owned by MGM, Lion’s Gate (LGF) and Paramount) is responsible for gracing the queues of NFLX subscribers with blockbusters such as The Hunger Games: Catching Fire, World War Z and Transformers: Age of Extinction.

NFLX Stock: Buy the Dip in Netflix While You Still CanNFLX stock has fallen about 12% so far this week — although the broad market volatility is partly to blame — but my eyes are drawn to the silver lining: This is a bargain-buying opportunity.

And those of you who follow my Fox Business show, Making Money with Charles Payne, already know, this is a stock that I think is only going to keep growing for years to come.

The Case for NFLX Stock

Netflix is one of the leading Internet television networks in the world, with more than 65 million subscribers located across 50 countries. The company offers a streaming service with a library of more than 100 million hours of content, including original movies and series, documentaries and non-exclusive feature films.

So as long as you have an Internet connection, you can enjoy countless hours of binge watching for as little as $7.99 a month.

Compare that to the monstrous and expensive cable packages that giants like Comcast (CMCSA) and Verizon (VZ) currently offer, and Netflix is almost a steal — especially if you’re “borrowing” WiFi from your neighbor.

Many of you may remember when Netflix first came onto the scene in 1997 as a DVD rental-by-mail company. After five years of attempting to find a profitable and sustainable business model, and another five years of fighting with Blockbuster (RIP), NFLX finally began streaming in the U.S. in 2007 and internationally in 2010. Netflix plans to be in all the major global markets by 2017 — just 20 years after its humble beginning.

July was a big month for NFLX stock, as the company executed a 7-for-1 stock split (Netflix stock had more than doubled to a high of $716.16 since the start of the year), and then went on to report an unbelievable second quarter the following day, sending Netflix shares to new all-time highs above $115 (equivalent to more than $805 before the split) before the month ended.

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In a period in which it is typically difficult for Netflix to add and sustain new subscribers given the onset of warm weather, Netflix managed to gain 3.3 million subscribers around the world in the second quarter of this year. For comparison, the company added 1.7 million subscribers in the second quarter of 2014. Looking to the current quarter, management expects to add another 3.6 million subscribers, and if they’re able to achieve this, NFLX would have added more than 16 million subscribers (a 30% increase) in just one year.

The outstanding results overshadowed a 63% decline in earnings, as NFLX invested heavily in international expansion, but the 6 cents per share in earnings still beat the Street by two pennies. And its 23% year-over-year increase in revenue to $1.64 billion was in line with expectations.

As I mentioned, this stock is a favorite of mine. In fact, I’ve been in and out of it more than 25 times since it made its IPO in 2002 — I first latched onto its spectacular potential when I was sitting in my house and learned that I was the only person without an account — and I wish I had never traded it from when I initially bought in at just $16. Still, while NFLX is an extremely volatile name, I’ve been able to buy on the dips to make a lot of money when it swings higher.

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The stock’s current weakness is presenting one of those buy-on-the-dip opportunities.

Netflix has grown tremendously over the course of its 18-year life, but I don’t believe it has reached anywhere close to its peak just yet and has the potential to make you a lot of money, possibly in a relatively short period of time.

I see NFLX stock as a good buy here under $115.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/nflx-stock-netflix-epix/.

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