Dreamworks Animation Skg Inc (DWA), Netflix, Inc. (NFLX): One Great Opportunity for Streaming Larger Profits

Dual wedding

The addition of Viacom’s content on Amazon.com, Inc. (NASDAQ:AMZN) Prime is a good move for both companies, as it enables Viacom to keep making money off of streaming and gives Amazon Prime a competitive edge in the children’s viewing experience. That deal was the largest in Amazon Prime’s history and shows that Amazon is aggressively trying to get into Netflix’s turf.

As far as Viacom goes, it trades at a PE (trailing-12 months) of 16 with an expected growth rate of 13% to 16% over the next several years. If it can hit those targets, then combined with its 1.8% dividend yield a case could be made that this company is slightly undervalued by 5% to 8%.

Amazon.com, Inc. (NASDAQ:AMZN) is a company with explosive growth just like Netflix, Inc. (NASDAQ:NFLX), with its EPS expected to grow by 146% over the next year. While Amazon has no PE, this company trades more around its prospects than it does its fundamentals. Amazon dominates the online-retail space and is moving into the cloud and into your living room with Amazon Prime. I’m bullish on Amazon in the long term, but I would wait for a pullback to around $240 to buy in.

Final thoughts

As the battle for the living room rages on, it is important to keep up to date on which content provider is providing content to who so you can see how shifts in subscriber and viewer bases might happen. This way you can stay one step ahead of the curve and have market-beating returns.

Callum Turcan has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, DreamWorks Animation, and Netflix. The Motley Fool owns shares of Amazon.com and Netflix.

The article One Great Opportunity for Streaming Larger Profits originally appeared on Fool.com.

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