The past few years has seen a major jump in streaming services from various media companies. The competition has heated up, but the big players are up for the challenge.
That’s seen with the original streaming giant Netflix (NFLX), which not only started streaming old shows, but started creating award-winning content to keep subscribers content with their monthly payments as well. To stay on top, the king of content has now bought the king of comedy.
Shares got a boost late last week as Netflix added to its $27 billion in content assets with streaming rights to all 180 episodes of Seinfeld.
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While the stock is still right near all-time highs, the 1990s “show about nothing” remains a popular streaming option (along with Friends). Still binge-worthy, the show can continue to keep subscribers on the site over those of competitors in addition to the company’s other original and historic content.
Action to take: Shares are conventionally pricey at 45 times forward earnings, but that’s actually the lowest valuation for shares in over a year. With earnings up 88 percent over the past year, shares are cheap relative to the company’s earnings growth. Of course, shares don’t pay a dividend.
With shares trending up and near all-time highs, the smart bet is on shares heading higher. The January $630 calls, last going for about $30, are less expensive than buying shares outright, and could see mid-to-high double-digit profits in the next year.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.