The end of the first quarter of the year saw the Nasdaq rebound more than 20 percent off of its lows from last year. Technically, that means the index is in a new bull market.
And that’s no surprise when looking at some of last year’s hardest-hit tech stocks. A few have managed to nearly double off their lows. And they could move higher, as the flood of money hasn’t hit this space yet.
One company that’s benefited from this trend is streaming giant Netflix (NFLX). Shares are nearly double off of last year’s lows. Plus, the company’s bond rating was just upgraded to investment grade. That’s a sign that the company is doing well operationally – not just seeing its stock price move higher.
While earnings still remain off, Netflix’s focus on improving customer retention in the post-pandemic era are faring well so far. And profit margins have improved to 14 percent in the most recent year, as the valuation has also trended down to 28 times earnings.
Action to take: Shares likely have some more upside ahead, particularly as smaller investors move back into the stock as it continues higher. At present, shares don’t pay a dividend.
For traders, the September $425 calls, last going for about $15.75, offer mid-double-digit returns in the months ahead on a continued rally in Netflix shares.
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.