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Netflix (NASDAQ:NFLX) is an attractive investment in light of its prominence in the market in early 2011 and its consistent popularity among consumers thereafter. The drastic drop in stock price due to poor management decisions and increasing competition has created an opportunity for aggressive investors to add this Internet commerce tycoon to their portfolio at a discount. I believe the Netflix model was a pioneer in the industry and represents the progression of society and multiple industries as a whole. Netflix is capable of rebounding upwards toward its peak $300 stock price and beyond. Buying or holding shares in Netflix should be valued as a mid- to long-term investment with high growth potential.

The current stock price is around $70, which is near the minimum of its 52-week range of $304 in July of 2011 down to $62 in November 2011. The stock was back up to $129 as recently as February and has been trending toward the minimum price since that time. The 50-day and 200-day moving averages are $85 and $94, respectively, and all indications suggest that the stock price is on its way down in 2012. An increase in competition and pressure from cable companies and the FCC is partly responsible for this negative trend. Investors should feel confident investing at the current discounted stock price, or they may benefit by waiting longer for more potential dips in the stock price in 2012. Netflix has the business model, market share and customer base to weather the storm, so investors should buy now and hold for the future, looking beyond 2013 and 2014. The beta is trending around 0.5, so there is some stability and predictability with changes in its stock price compared to the rest of the market.

The returns on equity, operating margin and net margins have all been decreasing for the past three quarters. The price is more than 1.15 times sales, while sales growth has increased by more than 20% since the same time last year. The current stock price is more than 20 times earnings and is projected to increase in the next year. Most of the numbers suggest that Netflix is currently overvalued. Gross margin is over 30%, while institutional ownership is over 85%. The reasons to like Netflix are simple: Its current operations and market share are clearly advantageous to the company regaining its position in 2011. Netflix has more than 25 million subscribers in established and growing economies like the U.S., the U.K., Canada, Latin America, and Ireland. Netflix is available on more than 800 different types of devices. These numbers will grow significantly as the mobile computation industry grows. This is the major reason I like Netflix over its competitors and even over the cable companies.

Netflix has the best business model of any media provider on the planet. Netflix's service is still highly regarded and popular among subscribers. Netflix is certainly capable of getting more customers back with promotions, alternative pricing models and forming new contracts with networks, studios and tech companies as well. Society is trending toward mobility away from the desktop and television and cable companies. This is the main reason Comcast (NASDAQ:CMCSA) and other cable providers are interested in establishing a tier pricing plan for data usage supported by the FCC. Netflix is fully capable of being a replacement product for cable in due time. The cheaper price and ability to view shows on demand will make it the obvious and more appealing choice over cable. Netflix is currently focused on building its market in Latin America and providing access to Netflix originals, featuring renowned actors like Kevin Spacey, or bringing back popular shows like "Arrested Development." Netflix is set to release four more original shows in 2013.

Simply put, Amazon (NASDAQ:AMZN) and Coinstar's (CSTR) Redbox are inferior products when compared to where Netflix is right now. They are trying to catch up to Netflix, while the major cable providers are attempting to safeguard their own market share against Netflix's growth and appeal. The only impediment to its growth right now is the attempt by cable companies like Comcast to gain legislation limiting consumers' bandwidth by using pricing tiers, in order to dissuade them from overindulging in Netflix.

The relationships that Netflix forms with other major brands in similar industries will be invaluable in helping it reach new customers in a variety of ways. Direct contracts with networks and manufacturers will help overcome this latest obstacle. Offering promotions and Netflix as a package or bundle upon purchase will help build its market share in the mobile computational market. Most people are using tablets and laptops more often than desktops or televisions. Netflix has the capability of examining its subscribers' usage in order to figure out what works best and what ventures are not worth the contracts. Dropping STARZ due to its high renewal price after analyzing subscriber usage was a wise decision to help safeguard future earnings.

As Netflix grows and becomes even more mainstream, it will become more of a necessity for vendors and third parties to carry it, making it more valuable and warranted for discounted contracts. AMC was able to improve viewing numbers by 20% to 30% by contracting with Netflix; it helped make the show "Madmen" popular again because people were able to go back and view each season in order to catch up. Cablevision (NYSE:CVC) estimates that 40% of its broadband customer base uses Netflix, and Netflix is able to offer its service for about 10% of the fees of most cable providers. This makes it an effective complimentary or substitute service for most consumers to use. Forming partnerships with providers like Dish (NASDAQ:DISH) could prove to be beneficial in the future as well.

As long as Netflix avoids pricing and management blunders of the past, it will gradually rise to the high stock prices of early 2011. The popularity of tablets and growth of the mobile computation and tech industries will help spur and support earnings growth for Netflix. Building exclusive relationships with studios, service providers, and device manufacturers -- as well as focusing on emerging markets -- will ensure success for Netflix, making it a very appealing long-term investment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Netflix: Don't Listen To Wall Street On This One