Investing

4 High-Flying Stocks That Could Fly Even Higher in 2016

24/7 Wall St. Staff

Published: December 23, 2015 12:15 pm

Last Updated: January 13, 2020 3:45 pm

While buy low, sell high is the best way to make money quantitatively, it requires impeccable timing and more nerve than most investors possess. Buy high, sell higher is more the typical strategy, also called trend following. Here are four stocks that, while expensive at current levels, have fundamentals good enough to continue and even exceed their success in 2015 through next year.

Netflix

Netflix Inc. (NASDAQ: NFLX) has been one of the darling stocks in the tech space for the past five years. At the end of the past decade, the stock traded a little shy of $10 a share. At the end of October this year, the stock logged all-time highs of $123, and it currently trades just off these highs.

On the one hand buying high is not generally recommended. On the other hand, there is no major threat to Netflix’s status as king of streaming, at least not currently. Amazon is the runner up at 13% market share to Netflix’s 36%, but Netflix may be growing too quickly for Amazon to catch up.

Netflix has revamped its technology to make it more accessible from a bandwidth perspective, and it just pulled off a successful Japanese launch launch, something that critics suggested was going to be a big ask given the current state of the Japanese economy. With a focus on original content, sports programming and in-house movie production slated for the first half of next year, expect Netflix to spearhead the subscription-based online content space for the foreseeable future. It is an expensive stock, but not unjustifiably so.

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Walt Disney Co. (NYSE: DIS) suffered a few downgrades last quarter, as losses primarily related to ESPN put pressure on expectations. ESPN though is still the dominant force in live sports programming in the United States, and it looks set to hold onto its dominance for a long time. The revamped Star Wars franchise is already set to bring in more than $2 billion on the back of the latest movie’s ticket sales alone, and merchandise, spin-offs and amusement park associated revenues probably will double this number.

Not to mention the follow-up movie, set for release early 2017. Disney is one of the world’s powerhouse brands, and at its current 15% discounted price on this year’s highs, looks to be a strong value candidate as we head into 2016.
Amgen

Amgen Inc. (NASDAQ: AMGN) is one of a number of companies in biotech that benefited from the strength in the sector over the past half-decade, but unlike many others, it hasn’t suffered too much of a correction during the latter half of this year. This comes despite a number of its key revenue generators facing biosimilar competition.

The company hiked its dividend by 27% last week and expects to buyback between $2 billion and $3 billion throughout 2016. From a purely quantitative perspective, this makes the biotech behemoth an attractive exposure for 2016. Add in the first insight into the performance of its headline PCSK9 inhibitor, Repatha, in a cardiovascular indication scheduled for early 2016 and top line for its secondary potential blockbuster romosozumab expected June 2016, and we’ve got an exciting year ahead for Amgen.

Facebook

Citigroup recently listed Facebook Inc. (NASDAQ: FB) as one of its so-called all-weather stocks, those that have outperformed the S&P across all four predefined phases of market movement during 2015. The company recently announced it had reached 1.55 billion monthly active users, as well as 900 million WhatsApp and 400 million Instagram users. In the third quarter, for the first time, 1 billion users used the platform daily. The social media giant generated $4.3 billion revenues across that quarter and expects to report even higher numbers for the current period.

Video views are doubling quarter over quarter. Mobile use is growing, and Facebook has achieved a seamless transition from desktop to handheld as far as its advertising revenues are concerned. Comparisons with former players in the space, such as MySpace and Friendster, have become moot. Despite claims that Facebook has become “uncool” by critics, user interaction across practically all demographic ranges is at all-time highs.

Zuckerberg’s ability to spot the next social trend like he did with Instagram and WhatsApp, coupled with Facebook’s ever deepening pockets, positions the company for further growth during 2016. Amazingly, there is still upside potential at its current $300 billion market cap.