Best Buy Co., Inc. (BBY), Netflix, Inc. (NFLX): Stay Away From “Seriously?!” Stocks

Netflix head Reed Hastings may have talked up “binge viewing” in recent months, and although I’ve indulged in that behavior using Netflix once in a while, it’s usually for very old shows. When it comes to the hottest shows that I’ve wanted to catch up with now, to talk to friends about — Game of Thrones being the most recent example — I’ve had to turn to Amazon. I doubt I’m the only one.

The Netflix of yore differentiated itself with its new offerings as well as a back catalog of great content on DVD. Back in those days, it put Blockbuster to shame when it came to breadth and depth of content. In the streaming world, it’s been much more difficult for Netflix to offer a product that’s so positively positioned compared to rivals. The new Netflix will not be the strong grower it used to be.

Netflix, Inc. (NASDAQ:NFLX)’s current price makes it a “Seriously?!” stock.

Gearing up for serious pain
Bull markets make investors happy, but that can be a huge problem. Investors should be more careful than ever when they’re searching for solid long-term investments when every stock seems to be heading for the skies.

The examples I’ve chosen above have a common thread: Amazon’s threat. Amazon’s actually a more rational stock, despite its forward price-to-earnings ratio of 84, (which is only a tad higher than that of Netflix). Its entire business is far more diversified, adding security. It doesn’t have to pull off a turnaround or offer its customers credit to buy its products. In fact, it has a slew of very loyal customers through its Amazon Prime service, which makes it the logical consumer choice for many people right off the bat.

Generally, it’s a crucial time to assess stocks and make sure their returns haven’t been juiced despite very little true business quality or financial success. Long-term investors who have seen the market’s ups and downs and propensity for near-term insanity would say, “Seriously?!” about many stock prices today. When the party’s over, many investors could end up in a world of hurt. Seriously.

The article Stay Away From “Seriously?!” Stocks originally appeared on Fool.com and is written by Alyce Lomax.

Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple Inc. (NASDAQ:AAPL), Dreamworks Animation Skg Inc (NASDAQ:DWA), and Netflix. The Motley Fool owns shares of Amazon.com, Apple, Microsoft, and Netflix.

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