Netflix (NFLX -0.51%) has been a stunning performer in the streaming video era. Since that fateful Qwikster episode in 2011, share prices have soared 3,370% higher. It's money-making drama of the highest caliber.
But past performance is no guarantee of future returns. There must surely be a few stocks on the market today that will crush Netflix's returns from this point. So, we asked a few of your fellow investors to share their best candidates for Netflix-stomping gains.
Read on to see how Cue Biopharma (CUE -3.07%), Booking Holdings (BKNG -0.40%), and 8x8 (EGHT -3.59%) could leave Netflix investors in the dust.
Image source: Getty Images.
Is a cure for cancer in our future?
Chuck Saletta (Cue Biopharma): Tremendous progress has been made in the past few years in the fight against cancer. One of the most promising recent technologies in that fight has been immunotherapy -- training a person's own immune system to fight cancer. It has already shown promise in treating some cancers, and research is continuing on ways to increase the type of cancers and patient profiles that it works for.
One bold research company, Cue Biopharma, is working to develop an immunotherapy platform to treat a broad range of cancers, not just the tightly targeted types treatable by it today. It's an incredibly audacious goal, but one that, if achieved, could put us much closer to making cancer a much more effectively combated disease.
To be perfectly clear, Cue Biopharma's research is still in early stages, and the company is currently hemorrhaging cash as it invests in that research with no revenue to support it. That makes an investment in its shares incredibly risky and highly speculative. After all, it not only needs to develop a platform that actually works, it also needs to be able to take that platform through the costly and time-consuming FDA approval process before it starts to see revenue.
That said, if it's successful and can actually develop, gain approval for, and bring to market a platform that can enable broad-scale cancer immunotherapy treatment, its possibilities are astronomical. Cue Biopharma's growth in that scenario could easily put Netflix's returns to shame.
Risky business
Anders Bylund (8x8): If you want to beat Netflix at its own high-growth game, you will have to take some risks. On that note, let me introduce you to 8x8, the most exciting little telecom-like company you've never heard of.
8x8 sells voice and video communications services built on cloud-computing concepts. The company mostly serves small and medium businesses at this point, but it has started to sniff around a few huge customers in the enterprise category. Big contracts are the long-term future of this business. According to CEO Vik Verma, only 10% of the enterprise communications market is served by cloud-based solutions today, leaving the vast majority of a $50 billion annual sales opportunity untapped.
Now, 8x8 is hardly the only game in town. Besides a handful of other cloud communications specialists, the big boys of the telecom world also dip their toes into these waters. There are no guarantees that 8x8 will beat all comers and become the undisputed king of internet-based enterprise communications. But you can't win if you don't play, and 8x8 is most definitely in the game.
This company has some high-growth chops. Over the last five years, 8x8's revenues have increased by 160%, closely followed by 184% higher share prices. But shares are trading at a mind-boggling 208 times forward earnings estimates and 109 times the company's free cash flows. At these nosebleed levels, it's a volatile ticker that's prone to sudden jumps -- and the occasional crash.
So, I'm not 100% sure that 8x8 is a guaranteed long-term winner. All I'm saying is, if the company keeps up the good work for another few years, it could make shareholders very happy indeed.
If.
Don't back up your truck to the buying window. This is a lot of speculation and a certain amount of gambling, but that's what it takes to beat Netflix, in my book.
Image source: Getty Images.
Watch this stock fly
Dan Caplinger (Booking Holdings): It's hard to bet against Netflix, especially immediately after the streaming video giant just announced another quarter of strong financial performance. Yet Netflix is having to make a transition away from simply being a conduit for delivering other people's content to a willing audience of viewers, spending billions to come up with its own exclusive content instead. That's a smart move for the company, and it could promote long-term growth, but it still requires a big investment and fundamentally changes the nature of the business.
By contrast, Booking Holdings has largely been able to stick with its successful business model of offering a wide range of accommodations and other travel services using the internet. Its recent name change reflects the transition the company has made, with consumers seemingly less enthusiastic in the name-your-own-price propositions that made the company's Priceline segment famous and instead highlighting the highly successful Booking.com hotel booking website.
Booking Holdings faces its own growth challenges, as rising competition has led some to fear that hurdles to further revenue gains could prove difficult to overcome. Yet through smart acquisitions, Booking Holdings has been able to answer past competitive threats, and the online travel giant has plenty of financial resources to use if future situations arise that warrant quick strategic action. In the long run, online travel has greater growth potential than entertainment, and that should give the smaller Booking Holdings an edge.
