Netflix Crushes on Earnings as Dow Craters 175 Points

Walt Disney stock falls in the selloff as Arcos Dorados slumps for second straight day

Jan 23, 2014 at 6:14PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

During the last decade, a loquacious subset of American investors has grown increasingly disturbed by China's economic influence over U.S. business. As the U.S. was hit by the financial crisis, China continued to grow by leaps and bounds. Now, however, the murmur has grown to a deafening roar, and today's market did nothing to quiet the crowd. A gauge of China's manufacturing sector caught Wall Street completely off guard by showing a contraction in January. Largely ignoring earnings results from U.S. companies, markets turned their attention to Asia, and sold off steeply as a result. The Dow Jones Industrial Average (DJINDICES:^DJI) plunged 175 points, or 1.1%, to end at 16,197. 

Walt Disney (NYSE:DIS), which fell 0.7%, was somewhat insulated from today's pullback, but not entirely. Even though Walt Disney was one of the Dow's biggest gainers yesterday after an analyst cheered the company's ownership stake in A&E, that momentum lost its fight with the bears today. If you're looking to try your hand at investing in the entertainment sector, you'd be hard-pressed to find another company with the long-term potential of Disney. Sure, it's a blue chip, so it won't be doubling anytime soon; but it pays a 1.2% dividend and boasts a deep bench of "cash-cow" caliber assets that any of its competitors would kill to have.

Arcos Dorados (NYSE:ARCO), despite two consecutive days of 6% sell-offs, also boasts an invaluable asset: it is the largest franchisee of McDonald's restaurants in the entire world. Arcos Dorados has a firm grip on the Latin American market, where it operates or franchises the McDonald's name in 20 countries and territories. The two-day slump, which sent the stock to 52-week lows, was triggered by a downgrade from JP Morgan, which reduced its price target from $14 to $11 per share. But before you go writing this company off, remember that analysts don't always have your best interests at heart, and then recall that JP Morgan became suddenly bullish on Arcos Dorados less than three months ago. 

I doubt a single analyst downgraded Netflix (NASDAQ:NFLX) stock today, as shares soared 16.5% on a blowout quarter and rosy talk about the company's future. The streaming entertainment giant hit all-time highs Thursday on the heels of its fourth quarter, which saw Netflix boost subscribers by 10%, or 4 million, in just three months. And Netflix certainly keeps its ear to the ground for game-changing technologies that could impact and grow its business. Just as it was a trailblazer in the streaming video segment, Netflix's VP of IT Operations, Mike Kail, spoke enthusiastically about an over-the-head, wearable LED device that could change the way people watch TV and movies in the coming years.

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Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends McDonald's, Netflix, and Walt Disney. The Motley Fool owns shares of Arcos Dorados, JPMorgan Chase, McDonald's, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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