Back on February 19, as it became apparent that a mysterious virus in China had begun reaching across the globe, I named Netflix (NFLX) “The Best Coronavirus Stock,” recalls Crista Huff, editor of Cabot Undervalued Stocks Advisor.
At the time, I wrote, “Want a stock that’s probably going to gain customers during this virus epidemic? Look no further than Netflix." The first-quarter earnings release on April 21 confirmed it.
The big, celebrated number was the 15.8 million new subscribers, far surpassing Wall Street’s expectation of 8 million new subscribers. It appears that movie-watching was a far more popular activity during this quarantine season than even the experts had predicted!
Netflix management also delivered surprisingly high forecasts for the second quarter, including an expectation of $1.81 diluted earnings per share, when the analysts’ consensus estimate was only $1.55. This earnings projection nails down the answer to the question, “How is the outlook for Netflix, going forward?”
Between the outstanding first-quarter subscriber growth and the continued rising operating margins that are enhancing profits, investors should remain confident about owning this superb growth stock.
You’re going to read negative headlines that announce that coming quarters will not be as strong as Netflix’s first quarter, as COVID-19 fades from the scene. Ignore the headlines. Instead, focus on Netflix’s second-quarter projections, which are outstanding.
I expect 2020 to present difficult moments for U.S. stock investors as the economic impact of the global quarantines continues to deliver waves of bad news.
Despite this year’s stock market turmoil, Netflix shares rose to an all-time high this month, proving it’s perhaps the best coronavirus stock out there. However, no stock is impervious to trauma in the broader stock market. Accumulate NFLX during pullbacks. Buying low is an investor’s best revenge.