When it comes to stocks, bigger is not always better.
Sometimes name recognition works against a company, in that some investors happily buy shares in companies they've heard of. That's the stock market equivalent of when novice horse racing fans bet aggressively on a contender based solely on the horse's name. You don't want your investment thesis to be the equivalent of someone placing $2 to win on a horse named "Can't Possibly Lose."
It's not that the horse is a bad horse or that a share of a popular company always means you shouldn't buy it. Instead, when making either choice, you want to ignore the name and look at the fundamentals. Whether you're asking "Does this horse have what it takes to win the race?" or "Does this company have what it needs for long-term success?" -- that's what you need to examine.
The three companies here are all big brands -- names you most certainly know. They're also companies with the building blocks in place to move even higher. While they aren't bargains, they're long-term buy-and-hold stocks that are poised for steady, strong growth.
Think of it as it's a cumulative effect. Very few people will join Netflix just because of a single title. But there's a tipping point. We have one more title that has great excitement, you're hearing a lot about, and that triggers you to finally sign up for Netflix.
Chief Content Officer Ted Sarandos expanded on what Hastings said. He explained that as time goes on and new originals are added, the appeal of the product becomes stronger.
We have multiple seasons of our shows, and we see that the audience continues to build cumulatively and therefore the excitement for the upcoming season builds as well. So, in Q2 of this year, we have new seasons of a lot of our very popular shows, like Orange Is the New Black , Kimmy Schmidt , Bloodline , Sense8 , Master of None , and we think that they should have a pretty nice impact on our subscriber growth as well.
Because Netflix's biggest draw is its own content -- an asset it owns -- the company's appeal only gets stronger as time goes on. That means that not only will holdouts eventually have so much they want to watch they succumb and join, but existing members also won't be tempted to leave.
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