Apple Beats Netflix and Disney to $100

By Markets Fool.com

Image source: Disney.

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There were a lot of things thatNetflix(NASDAQ: NFLX), Apple (NASDAQ: AAPL), and Disney (NYSE: DIS) had in common in mid-June when it came to their stock prices.

  • All three stocks were trading in the $90s at the time.
  • Netflix, Apple, and Disney stock began the year above $100.
  • The three stocks had fallen into the double digits as the year played out, briefly bouncing back into the triple digits before buckling again under $100.

Netflix was the first one to claw its way back north of $100, but last month's move proved temporary. The stock got hammered following the weak subscriber growth it achieved during the second quarter, and the equally disappointing guidance it provided for membership gains for the current quarter.

Just one of the three stocks is no longer out of favor. Appleraced back into the triple digits last month following a well-received quarterly report. It may not have seemed very encouraging at first glance. The consumer-tech bellwether posted its second consecutive quarter of declining sales as iPhone sales continue to be sluggish. Margins continue to contract, something that has to seem ominous for a company that historically milked so much money out of its premium products.

However, Apple stock still manages to post its best single trading day in two years following the report. It's all about expectations. Apple is now projecting$45.5 billion to $47.5 billion in revenue for the fiscal fourth quarter -- well below the $51.5 billion it rang up during last year's fiscal fourth quarter, and likely stretching its streak of declining revenue to three quarters -- but analysts were holding out for a sharper drop. There's now hope that the new iPhone and Apple Watch releases later this year will lead to stabilizing growth during the holiday quarter before triggering growth for the entire 2017 fiscal year.

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Apple is no longer in the dog house. Let's explore what it will take to make Disney and Netflix popular with investors again.

I'm streaming for the one I love to find me tonight

Disney reports quarterly results on Tuesday afternoon, and all it would need is a 4.4% gain to get back above $100. But that won't be easy. It's been hard for any rallies to stick. The stock has poked its head into the triple digits during each of the past five months, but the gain has never been sustainable. A strong report could change that, but it may be hard to come by this time around.

ESPN, Disney Channel, and its other cable properties continue to suffer from cord-cutters. There's also been a slowdown in attendance at its Disney World resort. Even its movie studio -- armed with Marvel, Pixar, and Lucasfilm magic -- will have some tough comparisons to stack up against this time around.

Disney can naturally crush those doubts. It can show that revenue and operating profits continue to gain ground despite the challenges. It can also begin to offer some more concrete plans on opening dates for highly anticipated expansions for its theme parks in California and Florida.

Netflix, on the other hand, won't report quarterly results again until late October. Rates are moving higher this month for longtime subscribers who were grandfathered in to the original monthly rate of $7.99 two years ago. If it's able to retain more of those loyal customers than analysts expect, it could get the market excited again. The only thing better than exceeding subscriber growth targets is knowing that those video buffs are paying more for access. The stock has already started to recover most of the losses it suffered following its disappointing second-quarter report. Now it's time to see if Netflix -- and Disney -- have what it takes to join Apple back on the right side of $100.

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Rick Munarriz owns shares of Apple, Netflix, and Walt Disney. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. 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.