Stocks rallied through October, and the good times should continue this month for those long the market in the month ahead. Netflix (NFLX -0.33%), Trex (TREX -3.24%), and Disney (DIS -2.40%) are three U.S.-based companies that I see potentially moving higher in November.
Netflix is rolling out a new tier of its subscription service that could take the leading platform to a new level. Trex could have a catalyst that few are talking about in an economic contraction. Disney reports financial results later this week. Let's take a closer look at these three domestic stocks making waves.
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Netflix
Don't look now, but Netflix's signature "tudum" is sounding more like a magician's "tada" these days. Netflix shares are up 60% since its springtime low, and the reinvigorated leader of premium streaming services seems to be making the right moves lately. Last month's quarterly report was a blowout performance. After back-to-back quarters of sequential declines in paid memberships, it boosted its rolls by 2.4 million during the three months ending in September. It was previously bracing shareholders to expect just a million net new additions.
There's also the new ad-supported plan that Netflix rolled out in the U.S. and other key overseas markets late last week. When a reeling Netflix announced this summer that it would be introducing a cheaper tier where folks could save a few bucks a month in exchange for putting up with short marketing missives, it seemed desperate. The innovative disruptor was just ripping pages out of the membership-growth playbook that everybody else was using.
Pricing the new "Basic With Ads" plan at $6.99 a month -- when its entry-level one-device tier cost $9.99 a month -- seemed like a recipe for disaster. Instead of recruiting new deal seekers, would Netflix just be losing higher-paying subscribers who would trade down? Netflix recently said that it expects to make up that $3 gap through ad revenue. If it's able to pull this off, it will be a brilliant game changer.
Trex
On the other end of the market-reaction spectrum during earnings season, shares of Trex walked the plank after its disappointing financial update last week. Net sales plummeted 44% in the report, a startling end to a run of 12 consecutive quarters of healthy year-over-year growth spurts on the top line.
Virginia-based Trex is the leader in wood-alternative decking materials. Folks love its product, as it looks like the real thing without the wear and tear of the real thing. A Trex patio isn't cheap, but when you consider the time and money saved in maintenance and wood replacement, it's a smart choice.
The initial slowdown makes sense. Mortgage rates are rising, cooling the housing market. Retailers began to see folks hold off on Trex projects in June, and sales plummeted as those retailers had to work down existing inventory. The near-term outlook is still problematic, but let's play this out a different way. The inventory of homes on the market has also dwindled in this climate of rising rates. Folks who can no longer afford to move are just hunkering down where they are already living. Shouldn't this inspire them to invest in home improvement projects that may include outdoor decks to expand their living space? The stock was hit hard last week, but Trex may not be down for long.
Disney
There are a lot of things happening at Disney this month. This week alone we have a critical fiscal fourth-quarter report on Tuesday afternoon and the Black Panther sequel hitting theaters on Thursday night.
The House of Mouse is doing a lot of things right. Its theme parks are generating record results on both ends of the income statement. Its movie studio isn't cranking out the theatrical hits it did before the COVID-19 crisis, but that is largely because it's been feeding its Disney+ streaming platform with content that has made it a juggernaut in just three years. Disney's corporate home, like Netflix's, is in California.
Naturally, Disney is susceptible to a global economic crunch, but the stock is also trading a lot lower than it was before the pandemic sucker-punched the world. This is still a top media stock, and grabbing the most enviable content catalog at a discount this month is awfully tempting.
