Netflix Stock: Here's How to Play It Now

Chances are, you're among the many to have missed out on the 250% rally in Netflix (NASDAQ: NFLX  ) stock over the past year. That's OK. We can't all be Carl Icahn.

And you know what? We don't need to be to know that the markets for filmed and televised entertainment are changing. We already stream more than 1 billion hours of programming monthly via Netflix. YouTube, like Facebook, serves more than 1 billion users. All signs point to a lasting shift that's likely to benefit a variety of upstarts.

But which company is best positioned? How does Netflix stock compare to digital peers Amazon.com's (NASDAQ: AMZN  ) Instant Video and Coinstar's (NASDAQ: OUTR  )  Redbox. Here's what the number say:

Key Statistics
Netflix
Amazon
Coinstar

Current Share Price

$229.22

$278.06

$58.86

Shares Outstanding

58.4 million

455.2 million

27.4 million

Market Cap

$12.5 billion

$126.6 billion

$1.61 billion

Trailing P/E Ratio

562.13

Not available

15.46

PEG Ratio

7.78

5.67

0.65

Gross Margin

27.5%

25.4%

31.2%

Cash From Operations

(8.5 million)

$4.25 billion

$450.1 million

Sources: S&P Capital IQ, Yahoo! Finance.

And here's what Fools say, going by the data available in our CAPS investor intelligence database:

CAPS Category
Netflix
Amazon
Coinstar

CAPS Stars (out of 5)

**

**

***

No. of CAPS Ratings

9,708

6,837

740

Bullish CAPS Ratings

7,757

5,444

644

Bearish CAPS Ratings

1,951

1,393

96

Bull Ratio

79.9%

79.6%

87%

Source: Motley Fool CAPS.

Why does Coinstar get the highest rating of the three? "A single-digit EV/EBITDA and EV/FCF valuation makes this a steal," writes Foolish investor valuemagnet. " The decline of the DVD is not good for the core Redbox business, however, it is more detrimental to Redbox's competitors. I see this one outperforming, potentially becoming an acquisition candidate for a private equity player once again."

What to do now
Which of these stocks to buy has as much to do with the type of investor you are as the opportunity. Those looking for a diversified high-growth opportunity are more likely to gravitate to Amazon, which has even taken to delivering groceries. Coinstar and its lowball multiples are more likely to appeal to cheapskates such as valuemagnet.

And Netflix stock? I've found a place for it in my own portfolio, and I still like the opportunity. Hundreds of millions subscribe to some form of pay TV throughout the world. HBO has 100 million subscribers all by its lonesome. Each original program gets the company closer to becoming a network on the order of USA or perhaps SyFy, but with the added benefit of worldwide distribution. This is still a hypergrowth opportunity, I think, though at Netflix's current valuation, it could take years for new shareholders to realize gains. Nibble on weakness.

Do you agree? Let us know where you stand on the streaming opportunity, and whether you'd buy, sell, or short Netflix at current prices, using the comments box below.

Streaming sensation
Want even more information about how streaming is disrupting traditional television networks? The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities of investing in this hypergrowth opportunity. Click here to read the full report!


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