People staying home amid the coronavirus pandemic has been good news for streaming businesses.
Streaming has boomed during the quarantine with U.S. viewing of internet video on TVs rising 109% last month, according to Nielsen data.
Netflix (NASDAQ: NFLX) has been soaring ahead of earnings as the market bets the streaming pioneer saw a spike in new users in the first quarter. The stock is up nearly 40% over the last month and closed at a new all-time high of $439.17 on Thursday.
“We believe the unfortunate COVID-19 situation is cementing Netflix’s global [direct-to-consumer] dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” said Pivotal Research Group analyst Jeff Wlodarczak in a note to clients.
Disney (NYSE: DIS) shares have seen a boost as well, rising roughly 15% over the last month as the house of mouse sees surging subscriber growth to its Disney+ streaming platform, surpassing 50 million customers worldwide within just five months of its initial launch.
The 50 million subscribers figure came in well ahead of schedule, with Disney pegging a goal of 60 to 90 million global subscribers by the end of fiscal 2024 prior to launch – a target that Disney+ may hit four years early if the current trend continues.
But even with all of these names seeing climbing subscriber growth—and even with all of these stocks outperforming the market—there’s two in particular that primed for a breakout higher.
Strategic Wealth Partners president Mark Tepper said this week that, despite impressive new subscriber numbers for Disney+, Disney stock isn’t a buy right now.
“We sold Disney [Wednesday] because we think we’re going to buy it back lower,” Tepper said. “So, I know 50 million subs puts them way ahead of schedule, they were expecting 60 to 90 million by 2024. But let’s face it, this is less than 10% of their business and it doesn’t make them any money. And they’ve got some serious headwinds,” including the indefinite closure of Disney’s theme parks globally.
A better pick? Right now, Tepper likes Netflix, which he called “the pure play on streaming” of the group.
“People are stuck at home and they’re binge-watching everything,” Tepper said. “With Netflix, it’s all about their original content. They’re not pumping out a bunch of reruns and old movies and stuff like that. They’re consistently rolling out new, fresh, engaging, high-quality content.”
Miller Tabak chief equity strategist Matt Maley agreed that, from a technical perspective, Netflix looks like the better buy now.
According to Maley, Netflix “already broke out of a symmetrical triangle pattern,” and with the stock breaching its all-time high this week, “that’s going to be kind of a double boost to the stock, and really get it going.”
Another stock in the bunch Maley likes from a technical perspective is Amazon. The strategist noted that Amazon shares have just broken out of an ascending triangle pattern, which should give some momentum to a further upside move.
If the stock breaks out further, Maley said it will “get some momentum and momentum can be a real good play right now, especially in a name like Amazon.”