© Reuters. Should Investors Buy Netflix and AMD on this DIp?
Netflix (NASDAQ:) and AMD (AMD) have endured corrections in recent weeks. Should investors buy the dip or is this a new bear market? Taylor Dart makes the case for buying the dip.It’s been a volatile two months for the Nasdaq-100 Index (QQQ), but after a sharp double-digit decline, the index has regained its footing and is knocking on the door of new all-time highs. Unfortunately, while several growth names have pulled back considerably from their highs, there is little value out there, with valuations among growth stocks and the indexes sitting at or near record levels. However, these are two names that are out of favor that have been consolidating for several months, and both are now trading at very reasonable valuations. These two names are Advanced Micro Devices (NASDAQ:) and Netflix (NFLX), and both look like great buy-the-dip candidates.
While several high-octane growth names have seen a relentless bid under them since the election, NFLX and AMD have taken a back-seat, with AMD underperforming since its Xilinx (NASDAQ:) acquisition and NFLX seeing muted returns based on fears that a return to normal activity after COVID-19 would weigh on subscriber growth. In the former case, the deal is finally near closing which should help the stock regain its momentum. In the latter case, NFLX just came off a much weaker quarter than anticipated, with net streaming additions coming in at just ~4MM, down from guidance of ~6MM. While this is obviously a disappointment, it does not affect the long-term picture for the stock, which remains quite bullish. This long-term outlook includes significantly higher free cash flow, continued margin expansion with higher prices, and the fact that competition or not, there is a very big pie for all streaming companies as the shift from cable to streaming options continues. Let’s take a closer look at NFLX below:
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