By now, there is no doubt about it. When Netflix, Inc. (NASDAQ:NFLX) split apart its DVD business in 2011, the company started a secular change in media consumption that will never reverse course. That secular change is the transition from traditional TV to streaming TV. Netflix stock has been a star ever since.
Consequently, as consumers have cut the cord and moved to streaming TV options, Netflix’s subscriber base has swelled. From less than 25 million at the beginning of 2011 to 125 million today.
Netflix stock has swelled, too. From $25 at the beginning of 2011 to $330 today.
But that trade is getting crowded. Long NFLX is still a smart move, but valuation and over-crowding on the long-side present risks which could weigh on the stock into the foreseeable future.
Meanwhile, the market doesn’t seem to acknowledge the fact that there are whole bunch of other streaming TV stocks out there. Believe it or not, Netflix isn’t the only streaming TV service in the world, and investing in streaming TV doesn’t necessarily mean you have to invest in Netflix stock.
Indeed, there are a whole bunch of underappreciated streaming TV stocks out there that aren’t named Netflix. These stocks, due to their present under-appreciation, actually offer compelling long-term buying opportunities here and now.
Why Streaming TV Is Bigger Than Netflix
Netflix changed the way we consume media. Before, we consumed media in a pre-programmed fashion at times given to us by cable networks. We also consumed media with a whole bunch of advertisements sprinkled in there and as part of a hefty cable bill that ran up to and above $100 per month.
That is no longer the case. Netflix came in and gave us on-demand content while charging us next to nothing relative to cable. Now, we consume media in a on-demand fashion at times that work best for our schedule. We also consume media largely without advertisements and at a price that is relatively harmless ($10 to $15 per month).
But its not like Netflix is the only one who can do this. They may be the best at it. But they aren’t without competition. Consequently, there are multiple ways to invest in streaming TV without buying Netflix stock.
First, you could buy media companies. Media companies will start to shift their content from traditional TV to streaming TV, and launch their own streaming services. Those services should have solid demand, depending on the quality of the underlying content.
Second, you could buy traditional cable providers. That may seem counter-intuitive, but these traditional cable providers can and will shift their business models to streaming. It will be like cable, but the streaming version of it that can be played from multiple devices, presumably cost way less, and have certain on-demand functionality.
Third, you could buy tech stocks. Giant technology companies can easily pivot into this space. They have tons of cash, and huge audiences. All they need to do is invest money into acquiring and developing content, and stream that content to their bases.
Fourth, you could buy consumer tech stocks. Consumers need a way to enable all these streaming devices. Thus, consumer technology will have to advance to a point where consumers can stream multiple services from one device. Demand for these devices will soar in popularity over the next several years.
Disney and the Streaming Business
As far as media companies go, your best bet is Walt Disney Co (NYSE:DIS). Disney has, largely without competition, the most robust and highest-demand slate of content in the world. From Disney originals to Pixar to Marvel to Star Wars, Disney is behind just about every blockbuster movie in the past decade.
Thus, when Disney launches its own streaming service in late 2019, demand will likely be very strong.
AT&T, DirecTV and Streaming
On the the traditional cable side, AT&T Inc. (NYSE:T) is one of the more attractive options. The company is behind DirecTV NOW, which is one of the biggest and most successful streaming TV services in the U.S.
This service is essentially just like DirecTV, but a streaming version of it. Services like this will only grow in popularity over the next several years, and help offset cord-cutting pain at traditional cable providers.
Facebook Watch Could Be for Real
For tech stocks, the buying list is quite long. Facebook Inc (NASDAQ:FB) is already deep into this space with Facebook Watch.
Considering the company has two-billion-plus users on Facebook, 1-billion-plus users on both WhatsApp and Messenger, nearly 1 billion users on Instagram, and a whole bunch of cash on the balance sheet, it really is only a matter of time before Facebook acquires or develops quality content and streams it to the biggest user base in the world.
Google, YouTube and the Rest
Alphabet Inc (NASDAQ:GOOG) also already has its fingers in this space with YouTube. More recently, Google launched YouTube TV, which is essentially streaming cable without any of the wires and big costs.
On the consumer side, the most obvious streaming stock to buy is Roku Inc (NASDAQ:ROKU). The company sells devices which enable streaming platforms, and has created a software ecosystem which is capable of hosting all these streaming services.
Importantly, Roku is content-neutral, and that will help the company be a choice streaming device enabler over the next several years. Apple Inc (NASDAQ:AAPL) is also a player on the consumer side, and perhaps even a player on the content-developer side, too.
Bottom Line on Streaming TV Stocks
Netflix stock is the best streaming TV investment, but it isn’t the only streaming TV stock to buy.
Indeed, there is a whole class of best streaming TV stocks to buy that include Disney, AT&T, Facebook, Google, Apple, and Roku. None of these stocks seem particularly priced for explosive growth in streaming TV, and as such, the upside thesis on these names looks quite compelling.
As of this writing, Luke Lango was long DIS, T, FB, AAPL, and GOOG.
