Drywall, hardwood planks, and Netflix (NFLX -3.79%)?
Jim Cramer offered an interesting perspective on the leading video service as a housing play during last night's Mad Money show.
"Despite its run, I think the stock has a strong chance of repeating its excellent performance," Cramer argues in discussing the shares that more than doubled this past quarter -- and have more than tripled since last summer.
He positions Netflix as a takeover target. He also points to the success of shows on cable networks in recent years. The desire for fans to get up to speed is now coming from binge viewing on Netflix.
Believe it. Mad Men -- not to be confused with Mad Money -- returns on AMC Networks (AMCX -4.23%) for its sixth season on Sunday. When ratings for the fifth season's premiere spiked 20% last year, the show's producer gave Netflix a lot of the credit.
After all, the show made its four earlier seasons available through the streaming service months ahead of the new season. At the time, Netflix chief content officer Ted Sarandos pointed out that 3.5 million of its subscribers watched the fourth season of the show through the video service, and that 800,000 accounts went through all of the earlier seasons.
However, Cramer's most interesting claim is that Netflix is a housing play.
There's no place like home screen
"As more homes are built, cable, dish and Netflix get hooked up," he says. "It's a natural tailwind. When you buy that new TV it has that Netflix clicker on the bottom."
He's right. The home resale market is buzzing again, but the real growth is taking place in new construction.
Lennar reported blowout quarterly results two weeks ago. New home deliveries were up 28%, but new orders rose by an even more encouraging 34%. We may be only talking about thousands of incremental homes in Lennar's case, but when you work the math across the countless other real estate developers, you're seeing a lot of homes going up in areas that were just tracts of land when the housing market stalled.
There are plenty of new homes going up, and saving money after signing off on a new mortgage makes in-home entertainment a very smart play. Given the three-figure monthly ransoms offered by cable and satellite companies, it wouldn't be a surprise to see a lot of first-time home buyers this year simply going for a Wi-Fi connection and sticking with HD antennas for over-the-air networks and Netflix for everything else.
Netflix is already at more than 27 million domestic subscribers, making it larger than any single cable or satellite service, and that figure is only going to get bigger as more video buffs get their own place.