How to Stay a Winner in the Streaming Wars

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.

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  • 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.

    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.

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  • 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.