How Netflix (And 14 Other Big Blue Chips) Got Its Groove Back

A lot can happen in a year. Take Netflix Inc. (NFLX).

Since 1997, Netflix Inc. has been a leading provider of on-demand internet streaming and DVD-by-mail services. With just over 2,300 full-time employees, the company brought in $3.2 billion in sales last year. But in September 2011, the company drew harsh criticism for its failed attempt to split into two services and, in a separate occasion, raising prices for as much as 60% of its services. So in the span of months, shares plunged over 60% and remained depressed through the end of 2012. So this time last year, this Aggressively-ranked stock was at the bottom of the barrel, earning a F-rating in my Portfolio Grader tool.

However, 2013 marked a turning point for Netflix; the company has been working overtime to turn things around. To woo its subscribers, Netflix is launching a new crop of original programming, including the recent release of House of Cards and the re-launch of Arrested Development. And its efforts have paid off—the stock has soared nearly 135% this year to date. But I expect further upside from here, and here’s why:

Just a few weeks ago, management announced strong growth across the board for the first quarter. To start, the company added about three million subscribers, bringing the total count to 36 million around the globe. The company also announced that subscribers watched nearly a billion hours of programming each month. So in the first quarter, the company swung to a $3 million profit; this is a turnaround from the $4.6 million net loss Netflix reported in Q1 2012. Adjusted earnings weighed in at $0.31 per share, which trounced the $0.18 consensus estimate by 72%. Meanwhile, revenues climbed 18% to $1.024 billion; this also topped the $1.02 billion consensus estimate. The surprisingly strong results sent shares of NFLX soaring over 20% and sparked a wave of analyst upgrades.

With analysts calling for over 20% sales growth and 369% earnings growth this year, NFLX is a B-rated buy. Currently, NFLX receives top marks for institutional buying pressure, earnings momentum, analyst earnings revisions and cash flow.

And NFLX certainly isn’t the only big “rags to riches” story of the past year. Every day brings something new on Wall Street, and pays to stay on top it all.  That being said, after digging through the 5,000 or so stocks in my Portfolio Grader database, I’ve uncovered 14 other big blue chips that have made incredible comebacks over the past 12 months.

Symbol Company Name Last Year’s Recommendation Current Recommendation 12-Month Performance
ADBE Adobe Systems Inc. Sell Buy 35%
AMP Ameriprise Financial Inc. Sell Buy 53%
AZN AstraZeneca PLC ADS Sell Buy 19%
BLK BlackRock Inc. Sell Buy 55%
GS Goldman Sachs Group Inc. Sell Buy 40%
K Kellogg Co. Sell Strong Buy 26%
LUV Southwest Airlines Co. Sell Strong Buy 74%
NFLX Netflix Inc. Strong Sell Buy 193%
NVS Novartis AG ADS Sell Strong Buy 40%
S Sprint Nextel Corp. Strong Sell Buy 206%
SYMC Symantec Corp. Sell Buy 54%
SYY Sysco Corp. Sell Buy 23%
VMED Virgin Media Inc. Strong Sell Strong Buy 126%
WAG Walgreen Co. Strong Sell Buy 43%
WM Waste Management Inc. Sell Buy 22%


Louis Navellier

Louis Navellier

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