May Pick: Netflix (NASDAQ:NFLX)
Netflix shares have been a notable underperformer over the past year, even against the lackluster NASDAQ 100. Down 62% in a year, Q1 results showed a drop in subscribers by circa 200k. It’s also forecasting a larger drop in streaming memberships in Q2, as the company battles with the post pandemic consumer behavior changes. Heightened competition from the likes of Disney+ and Amazon Prime is also worth noting.
However, we think the slump has been overdone, with all of the pandemic boost now written off the share price at levels sub $200. In the long run we think that streaming services will still benefit from a shift in sentiment away from cinemas. Further, Netflix should be able to transition a lot of multiple account holders onto their own memberships by tightening the loop holes. Finally, there’s still a huge amount of untapped potential with homes with broadband that currently don’t make use of any streaming service.
On that basis, we’d dip our toe in the water in May, looking for a turnaround in Netflix shares.
May Pick: Hour Loop (NASDAQ:HOUR)
This month I am once again choosing a small cap as my pick. Hour Loop has a chart that I have been watching for a while. I finally think it is ready for a strong move.
Hour Loop is a advertises themselves as a destination to find your perfect gift. They offer a wide variety of authentic high quality items at good prices. HOUR generates most of its revenue by selling items as a third-party reseller on sites like Amazon and Walmart.com. However, the company also operates its own e-commerce platform.
HOUR started this year by hitting a high of $10.33. The price has held above $3 over the past six weeks. It has also had the 50MA as support, which would be my risk on this trade. I think it has good upside and I can see the price reaching $6 again.
May Pick: American Express (NYSE:AXP)
American Express is a multi-national provider of credit cards and payment services. The stock is currently trading at ~$172, more or less flat year-to-date, despite the wider market drop. The company had a strong earnings release last week, reporting $2.73 earnings per share (EPS), beating consensus estimates of $2.41. Quarterly revenues hit $11.74 billion, up a significant ~30% from the same quarter last year. Alongside the stronger financials, AXP is benefitting from a pick up in new credit card acquisitions and a return to business travel. The company seems to be emerging from their pandemic struggles and we believe momentum will continue in their financial results and feed through to the stock price.
Analyst Recommendations – the institutional crowd is also relatively positive on AXP, as the latest Bloomberg survey of Equity Research Analysts showed that 97% have issued either a “BUY” or “HOLD” rating on the stock, with only 3% recommending “SELL”. The consensus 12 month target price implies a potential return of nearly 20% from the current levels.
To buy crypto and shares, register here with our preferred partner, EToro.