We recently compiled a list of the 20 High Growth Mega Cap Stocks You Can Buy And Hold For Next 5 Years. In this article, we are going to take a look at where Netflix, Inc. (NASDAQ:NFLX) stands against the other high growth mega cap stocks.
Exactly 5 years ago, the world struggled to deal with a black swan event: the COVID-19 pandemic. There was so much uncertainty that people didn’t even know if they’d be alive in the next few weeks, let alone figure out where the market was heading. Anyone who invested in the S&P 5 years ago would have gained 83%. If you had bought at the exact bottom, you’d have gained twice that amount.
What the above proves is that the present isn’t necessarily an indicator of what the future holds. All companies that had their workflows disrupted have recovered, some more than others. Some companies have strengthened their supply chains. Others have improved their work-from-home capabilities. Industries like airlines and restaurants have modified their business models to cater to the new dynamics.
These companies have been able to deal with the changing dynamics because of their financial strength and innovation. A company’s past performance and its finances give a good idea of whether it will be able to survive bad times. That’s why when we look at the best mega-cap stocks to hold for the next 5 years, we look at how well they have grown in the last 5 years.
To come up with our list of top 20 mega-cap stocks to hold for the next 5 years, we considered stocks with a market cap of at least $200 billion and a 5-year sales growth rate of at least 10%.
A home theater with family members enjoying streaming content together.
Netflix, Inc. (NASDAQ:NFLX)
Netflix, Inc. (NASDAQ:NFLX) is an entertainment services provider that offers feature films, TV series, games, and documentaries in different languages and genres. The company also provides members access to watch online content through TVs, TV set-top boxes, digital video players, and mobile devices. The company has grown its revenue by 14.25% over the last 5 years.
A few years ago Netflix, Inc. (NASDAQ:NFLX) was losing subscribers, raising concerns among shareholders. However, it has achieved an impressive turnaround by gaining 19 million subscribers in just the recent quarter. The company also grew its revenue by 16% YoY in Q4. The most interesting thing is its operating margins which went up from 21% to 27%, indicating that the company is retaining a greater portion of its revenue as earnings.
Netflix, Inc. (NASDAQ:NFLX) showed its capability of making profits by generating net cash of $1.5 billion from operating activities in the last quarter. The cash flows are not only helping with the stock buybacks but also bringing greater efficiency to the company’s content creation processes, which are capital-intensive by nature.
Overall NFLX ranks 20th on our list of the high growth mega cap stocks you can buy and hold for the next 5 years. While we acknowledge the potential of NFLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.