Five Opportunistic Stocks for 2013 (Part II)
Anh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Following the first part of 2013 opportunistic stocks, this article will uncover two more stocks with the potential to enjoy the nice run in the next year. Investors might expect that 2013 would be quite an interesting year, especially with the declining trends in the global PC market, the chipmaker for the mobile industry, and the potential of the streaming business.
Due to the downward spiral of the overall global PC market, the PC chipmakers followed the path as well. Intel (NASDAQ: INTC) has been the world’s biggest chipmaker, along with the invention of x86 processor. Intel currently holds around 60% of the total global microprocessor market, leaving its next competitor Advanced Micro Devices (NYSE: AMD) further away, with only 25% share. In addition, AMD’s total market cap of $1.7 billion only accounted for 1.6% of Intel’s, a very small percentage.
Intel has been struggling along with the weak PC industry, as around 66% of its revenue came from PC Client Group, with the two biggest customers, Hewlett-Packard and Dell. Currently, Intel is trading at $20.53 per share, with the total market capitalization of $102.14 billion. It has seen its market value lost more than 16% year-to-date, pushing its dividend yield up to 4.2%. However, I think 2013 is the year of opportunity for Intel. Many experts thought that Intel had the right ingredients for the new generation of mobile chips. Apple (NASDAQ: AAPL) has relied on Samsung to build the chips it designs, and for sure, its relationship would not last for long. Apple has been talking to Intel to take that role instead of Samsung. Intel has enough expertise and cash to make the move.
2011 and 2012 were two bad years for Netflix (NASDAQ: NFLX) with all the surprising internal events. The stock experienced a significant drop from nearly $130 per share to nearly $53.80 per share in September. However, the drop is not as fatal as in the second and the third quarter of 2011, when it plunged from $295 to around $63.80 per share. The cause for the huge drop was due to two reasons: first was because the CEO Reed Hasting changed the fee structure to separate DVD by mail service from the Internet streaming service, which frustrated subscribers. Second, Starz and Netflix partnership officially ended in the beginning of this year, so Netflix lost more than 1,000 film movies including famous ones such as “Toy Story 3,” “Young Frankenstein” and “Beetlejuice.”
However, Netflix just recently took a major step for its long-term future by signing the exclusive deal with Walt Disney. Starting in 2016, only Netflix’s subscribers can watch Disney’s new releases from Marvel, Pixar, and other Disney’s channels, taking away Starz’s licensing deal with Disney. In addition, Netflix enjoyed the exclusive rights to stream future Disney’s movies 8 months after they are shown in the theater.
In this year, activist investor Carl Icahn built positions in Netflix up to nearly 10%, with the expectation that Netflix would get acquired. He said: “I believe that there is going to be great consolidation between Netflix and, everybody's read about it, Amazon (NASDAQ: AMZN) or Microsoft or Verizon or Google, there are so many possible combinations.” Netflix indeed has a good subscriber base, of nearly 32 million subscribers, with nearly 80% of them streaming in the US. The number of Netflix’s subscribers is far more than that of Amazon and Hulu. Amazon with its Amazon Prime Service has approximately 9 million, nearly one third of Netflix’s, whereas Hulu is much less with only 2 million. In the next year, along with the new Disney deal, Netflix can welcome more and more subscriptions, and the stock might enjoy the nice run up.
Foolish Bottom Line
With the market leading position and the opportunities that lie ahead, both Intel and Netflix might enjoy a good year in 2013. Investors should take advantage of the volatility to buy at lower prices.
hoangquocanh owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, Intel, and Netflix. Motley Fool newsletter services recommend Apple, Amazon.com, Intel, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!