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MARKETS LIVE BLOG:

STOCKS SLIDE AFTER META'S REALITY CHECK, DOWNBEAT GDP

Caterpillar sinks 7% after earnings, management sees weakness in Europe, Asia-Pacific

1 Top Canadian Tech Stock That Beats Netflix (NASDAQ:NFLX)

Victoria Hetherington
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

The market leader in content streaming, Netflix (NASDAQ:NFLX), has come in for a drubbing this week while apparently low-balling on its expectations.

After failing to please investors recently despite solid data, the NASDAQ high-flyer is at the centre of the increasingly heated streaming wars, with some of the biggest names in the industry lining up their new platforms and preparing to go head-to-head for subscribers.

The streaming wars are Netflix’s to lose

By keeping expectations low, Netflix may be giving itself some wiggle room and setting up a positive next quarter. It may need to put the rabbit out of the hat when new offerings come online and draw subscribers away through the novelty factor. However, Netflix still maintains the best catalogue of movies and shows as far as variety and quality are concerned.

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Even Disney, as big as it it, may find itself reliant on cranking out variations of its stale IP. Meanwhile Apple, arguably better suited to endlessly selling us the same phone, may find it also has limited scope for actual content.

While Amazon has some new projects lined up, its back catalogue doesn’t hold a candle to the endless viewing recommendations of Netflix.

Despite the fact that its investors seem less interested in the wide economic moat that Netflix has carved out for itself, backed up with a pool of loyal subscribers and world-class upcoming content, than with the big names lining up to steal market share, Netflix is likely going to win in the long run.

However, even with a resurgent long-term rally after the content sector shakes out, at least one TSX tech stock can beat Netflix’s impressive returns.

A Canadian tech stock for capital gains investors

Soaring 883% in three years, Shopify (TSX:SHOP)(NYSE:SHOP) is a top tech stock that satisfies several investment strategies at once.

While it’s not a dividend payer, the opportunity for capital appreciation is strong with this one-stop play that offers exposure to the tech sector, the legal cannabis space, and the world of online retail. Its scope and scale in terms of retail is impressive: There are more than 800,000 Shopify stores accounting for $100 billion in sales.

Shopify has seen a lot of interest as a cannabis-linked play for steep upside. As Shopify’s Harley Finkelstein told CNBC’s Jim Cramer: “We felt it was really important for us to act quickly and effectively to not only win as much of the Canadian market as we possibly could, but also to show the rest of the world as they begin to think about cannabis sales that we are the first phone call that they should be making.”

The bottom line

The industry is beginning to discover where the bottleneck lies: content. While new platforms will rely on a mix of new shows and familiar franchises, even the big players will find it difficult to contend with Netflix.

However, for sheer momentum, there is a solid alternative in Shopify, a TSX stock that has held its own against the FAANG stocks of the NASDAQ.

More reading

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Amazon, Apple, Netflix, and Walt Disney. Tom Gardner owns shares of Netflix and Shopify. The Motley Fool owns shares of Amazon, Apple, Netflix, Shopify, Shopify, and Walt Disney and has the following options: long January 2021 $60 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. Shopify is a recommendation of Stock Advisor Canada.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019