Netflix (NASDAQ:NFLX) and Chill: 2 Tasty Dips to Snap Up

Hexo Corp. (TSX:HEXO)(NYSE:HEXO) and Netflix Inc. (NASDAQ:NFLX) make a surprisingly good mix of stocks in wavering industries right now.

| More on:
Lady holding remote control pointed towards a TV

Image source: Getty Images.

In a lot of ways, content streaming and legal cannabis are quite similar at the moment. Both industries are in flux, and both can boast strong brands with positive momentum. They’re also both suffering on their respective stock markets at present, offering contrarian investors upside potential from bouncing share prices.

Let’s take a look at an unusual pairing that fits the bill.

A top tech stock to watch for the bottom

Expect a continued dip for the king of the content streamers. Down +8% this week, Netflix (NASDAQ:NFLX) is taking a pummeling not only on the NASDAQ but also in the headlines. Indeed, any successes on the part of its A-list competitors over the next few months is likely to knock even more value off the FAANG-bloc favourite. So, why is a contrarian buy?

Well, two things are really at play here. First of all, Netflix stock has arguably been too expensive compared with other entertainment tickers, and investors are now punishing it. The knife has started falling, and may continue to do so until the content streaming industry settles. However, once Netflix bottoms out, which could be sooner rather than later, it’s going to look like a solid gold buy.

Secondly, it’s got a lot of stiff competition coming its way. Investors of a tech bent are starting to get nervous, sensing an extended sell-off on the way. And since Netflix is pitched against upcoming streaming challenges from high-calibre companies, investor sentiment is likely to stay bearish.

However, once the industry realizes that Netflix is stronger than it looks, the streaming stock could bounce hard.

The cannabis dip contains some appetizing morsels

Cannabis investors: if you haven’t marked October 17 in your diary yet, go do it now. This is the date when Canada will legalize a new round of cannabis product types, including edibles, topicals, drinks, and vapes.

A few cannabis companies were down in the dumps this week amid a vaping comedown, but some of the bargain-basement tickers are fresher than others. Aphria was looking solid as a market-share-capturing cannabis hero before ditching over 9% on vaping woes.

Meanwhile, HEXO (TSX:HEXO)(NYSE:HEXO) is a potent play in the legal weed space and is currently being rewarded by investors. Never mind its summer third-quarter slip, HEXO is on the up, with its sights set on the American CBD market. In fact, while you’ve got your calendar open, jot down October 29, the date HEXO releases its fourth-quarter results.

Up by a few percentage points, HEXO is one of the few cannabis stocks to have come out of last week with positive movement in its share price. Of course, HEXO will have its own watershed period this winter when cannabis-infused drinks produced in partnership with Molson Coors will hit the shelves.

The bottom line

HEXO is looking like a top play in the ailing cannabis space at the moment, with less exposure to the vaping controversy than its peers. Netflix is also looking tempting and could bounce back once consumers have tried out the alternatives.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Netflix. Tom Gardner owns shares of Netflix. The Motley Fool owns shares of Molson Coors Brewing and Netflix.

More on Stocks for Beginners

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Stocks for Beginners

3 TFSA Hacks That Could Make You a Millionaire

Do you want a $1 million without worrying about the tax bill? These TFSA hacks could help you become a…

Read more »

Early retirement handwritten in a note
Stocks for Beginners

These 2 TSX Growth Stocks Could Help You Retire Early

Buying these two TSX growth stocks can help you retire early by multiplying hard-earned savings in the long run.

Read more »

Technology
Stocks for Beginners

The Best Stocks to Invest $1,000 in Right Now

Want a great starter portfolio? Here’s a list of the best stocks to invest $1,000 in right now for long-term…

Read more »