With stocks near bear market territory, some names have been hit harder than others. A bear market marks a market-wide drop of 20 percent from a top. But some individual tech names, even big players, are down further than that.
One such example is Netflix (NFLX). The streaming platform has reported slower growth, a decline in subscribers for the first time ever, and increased competition in the streaming space. Shares are down more than half off their highs as a result.
Given the company’s headwinds, the decline makes sense. But there’s also been a market-beating decline in Alphabet (GOOG) that doesn’t. The advertising giant has sold off on fears of a slowing demand for advertisements in the past few months. Shares are now down about 25 percent off of their all-time highs.
But the company grew revenue by 23 percent over the past year, and this combination of higher revenue and a lower share price has sent the stock from a PE ratio of 35 last year to 19 today.
Action to take: It’s likely that the company’s strong balance sheet and profit margin will allow it to continue to succeed in the years ahead. Shares are a strong rebound opportunity for investors looking past the current market turbulence.
For traders, the September $2,900 calls, last going for about $15.00, offer a leveraged way to trade a move higher in shares. Given how far shares will have to rise for the trade to move in-the-money, it would be prudent not to get too greedy and take quick profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.