For years, Netflix (NFLX) dominated the streaming space. That allowed the company to grow quickly, and gain a massive market cap relative to its earnings. But competitors from across the media spectrum have come in with their own services.
One of the early streaming players hasn’t been seen as a competitor to the media streamers. But that appears to be changing, and this company may end up becoming a surprising winner in this space thanks to more visibility and even profitability.
The company is Alphabet (GOOG). Best known as the parent company of Google, the company also owns YouTube, the most valuable video streaming site in the world. And Google just earned the right to stream NFL football games for about $2 billion annually.
While that’s a hefty cost, the company can make up for it on advertising, especially if it’s getting more eyeballs on its site for longer. That bodes well for the tech giant.
Action to take: With a big streaming deal under its belt and shares down nearly 40 percent in the past year, the stock is starting to look attractive.
It’s even looking fairly valued, trading at 17 times earnings, down from 27 times last year. And even in a tough advertising environment, the company still sports a hefty 24 percent profit margin.
That makes shares look like a reasonable long-term buy at current prices.
For traders, the June $100 calls, last going for about $5.40, offer mid-double-digit returns on a move higher in shares in the first half of 2023.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.