In the ever-evolving world of high finance, even the wealthiest investors occasionally shuffle their portfolios, leading to intriguing shifts in the market landscape. Recently, a notable trend has emerged: some billionaires are reducing their holdings in American stocks like Netflix (NASDAQ:NFLX) and turning their attention northward to Canadian assets — particularly Brookfield Infrastructure Partners (TSX:BIP.UN). Let’s dive into the details.
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Netflix
Netflix stock, the streaming giant that revolutionized how we consume entertainment, has been on a remarkable journey. In the fourth quarter of 2024, the company reported revenues of US$10.25 billion, marking a 16% year-over-year increase. Earnings per share (EPS) stood at US$4.27, a significant rise from US$2.11 in the same quarter the previous year. This impressive performance was bolstered by the addition of 19 million new subscribers during the Christmas period, surpassing Wall Street expectations.
To sustain its growth trajectory, Netflix stock has been exploring new avenues. The company ventured into live sports by broadcasting two NFL games on Christmas Day, featuring performances by stars like Mariah Carey and Beyoncé. While this move aimed to diversify content offerings, it came with significant costs, with Netflix spending US$150 million for the two games. Plus, Netflix stock announced subscription price increases in markets including the U.S., Canada, Portugal, and Argentina, including the ad-supported membership tier accounting for 55% of all new signups in these countries.
Brookfield
Meanwhile, Brookfield Infrastructure, a Toronto-based entity specializing in utilities, transport, midstream, and data businesses, has been attracting attention. In its 2024 year-end results, the company declared a quarterly distribution of $0.43 per unit, representing a 6% increase compared to the prior year. This marks the 16th consecutive distribution increase, reflecting the company’s commitment to delivering consistent returns to its investors.
Brookfield Infrastructure reported strong financial metrics, with revenues reaching $21.04 billion over the trailing 12 months. The company’s operating margin stands at 24.80%, and it boasts a return on equity of 5.27%. These figures underscore the company’s robust operational efficiency and its ability to generate value for shareholders.
Analysts weigh in
Analysts have taken note of Brookfield Infrastructure’s performance. The company received a consensus “Buy” recommendation from seven analysts, with an average 12-month price target of $42.50. This positive sentiment reflects confidence in the company’s growth prospects and its strategic positioning in essential infrastructure sectors.
The shift in investment preferences among billionaires from U.S. tech stocks like Netflix stock to Canadian infrastructure assets like BIP.UN can be attributed to several factors. Infrastructure investments often provide stable, long-term returns, which can be particularly appealing during periods of market volatility. Plus, the essential nature of infrastructure services ensures consistent demand, further enhancing their attractiveness to conservative investors.
Foolish takeaway
Looking ahead, Netflix stock projects 2025 revenues between US$43.5 billion and US$44.5 billion, higher than prior estimates. The company also expanded its share-repurchase program by US$15 billion to a total of US$17.1 billion. However, the sustainability of subscriber growth remains a topic of discussion, especially with planned price increases and a shift towards advertising and live sports.
Brookfield Infrastructure Partners continues to focus on expanding its global footprint in utilities, transport, midstream, and data businesses. With a strong track record of distribution increases and solid financial performance, the company is well-positioned to capitalize on infrastructure development opportunities worldwide. Analysts expect earnings growth of 10.14% next year, from $3.45 to $3.80 per share.
For investors, the contrasting trajectories of Netflix stock and Brookfield Infrastructure highlight the importance of diversification. While tech companies like Netflix offer growth potential, it also comes with higher volatility. In contrast, infrastructure assets like BIP.UN provide steady, long-term returns, serving as a stabilizing force in a diversified portfolio.
