While buy low, sell high is the best way to make money quantitatively, it requires impeccable timing and more nerve than most investors possess. Buy high, sell higher is more the typical strategy, also called trend following. Here are four stocks that, while expensive at current levels, have fundamentals good enough to continue and even exceed their success in 2015 through next year.
Netflix Inc. (NASDAQ: NFLX) has been one of the darling stocks in the tech space for the past five years. At the end of the past decade, the stock traded a little shy of $10 a share. At the end of October this year, the stock logged all-time highs of $123, and it currently trades just off these highs.
On the one hand buying high is not generally recommended. On the other hand, there is no major threat to Netflix’s status as king of streaming, at least not currently. Amazon is the runner up at 13% market share to Netflix’s 36%, but Netflix may be growing too quickly for Amazon to catch up.
Netflix has revamped its technology to make it more accessible from a bandwidth perspective, and it just pulled off a successful Japanese launch launch, something that critics suggested was going to be a big ask given the current state of the Japanese economy. With a focus on original content, sports programming and in-house movie production slated for the first half of next year, expect Netflix to spearhead the subscription-based online content space for the foreseeable future. It is an expensive stock, but not unjustifiably so.
Walt Disney Co. (NYSE: DIS) suffered a few downgrades last quarter, as losses primarily related to ESPN put pressure on expectations. ESPN though is still the dominant force in live sports programming in the United States, and it looks set to hold onto its dominance for a long time. The revamped Star Wars franchise is already set to bring in more than $2 billion on the back of the latest movie’s ticket sales alone, and merchandise, spin-offs and amusement park associated revenues probably will double this number.
Not to mention the follow-up movie, set for release early 2017. Disney is one of the world’s powerhouse brands, and at its current 15% discounted price on this year’s highs, looks to be a strong value candidate as we head into 2016.