I love Netflix as a company.  The instant watch feature is so convenient that I could have something to watch every day if I had the time, even with the 1 dvd at a time plan.  I also owe them for the Netflix Prize contest, since I’ve learned a lot of data mining and machine learning stuff from the community they’ve grown for those subjects, and the autotrader wouldn’t have been possible without them (or at least it would have been a lot more difficult).  Enough with the lovefest though, how are they as a stock?

Staying in to watch movies is a lot cheaper than going out, and you can just look at BBI to see who’s owns the rental market now.  Like FDO or DLTR, NFLX seems to enjoy the weak economy.   More extreme than most other rallying stocks, they’ve almost tripled since the bottom last fall.  Checking out the P/E chart, that too has doubled, which is a bad thing if you’re bullish.  This is definitely not at a buy point unless we set up a long base for the next 6 months, but I wouldn’t buy any long term bullish things right now anyway.  We’ll just put this up towards the top of the watchlist along with AMZN, AAPL, and the likes.  This is in danger of becoming a stock I really like, yet never actually buy since the timing never works out, but it’s a good thing if you have a long list of those.  You never want to have to settle for the mean ugly girl, errr… I mean low quality stock due to a lack of good options.

Triggers

• No upside triggers – just watch and hope for a base
• Below $40 – reevaluate triggers on both sides

NDN has been following all the discount retail stores, like DLTR and FDO, whose stocks have been doing quite well in the current economic crisis.  The thinking goes, if people have less money they’ll go shop at places where they can get bargains.  If you check out the numbers on NDN though, they haven’t done enough to justify bucking the market trend.  Revenues are up a little, margins are horrible.  Now is probably not the time to be attempting a retail expansion, and I don’t see anything in them that tells me they’re that much better than the average corporation under these conditions. 

I don’t trade against trends, but if the industry gets more overbought this one should be an interesting swing trade in the down trend.  Remember, look for industry trends and then look for the best candidates within that industry.  In this case, wait for the discount retailer industry to hit the down trend and then look for the weakest company, NDN right now, to swing trade. 

Triggers

• Below $10.50 – swing trade short
• Above $12.50 – shift lower watch point up