1 Super Growth Stock to Buy Hand Over Fist, Despite Lingering Fears About Tariffs

The last few weeks have been a whirlwind for the capital markets. Over the last month, the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) have dropped precipitously — declining by 8% and 13%, respectively, as March 18.

Perhaps the biggest factor influencing investors’ decisions right now is uncertainty around new tariff policies and how they could impact the economy. In particular, technology stocks have been vulnerable to ongoing tariff jitters.

While the trends above might suggest that investors are running for the hills, I think there are still some solid opportunities out there. Let’s explore one growth stock that I think is a compelling buy right now, despite the lingering fears about tariffs.

Why are technology stocks selling off right now?

Making investment decisions based purely on emotion isn’t a good practice. However, given the sheer number of things that could happen from a trade perspective following tariff negotiations, I understand on some level why investors are hitting the selling button.

Take Tesla and Nvidia as two prime examples. Both of these companies are largely touted as leaders in the artificial intelligence (AI) revolution — pioneering new opportunities in computing, autonomous driving, robotics, and more. But over the last month, shares of Tesla and Nvidia have declined by 36% and 16%. Why is that?

Well, both of these companies operate in Canada, Mexico, and China, and Donald Trump has imposed tariffs on imports to the United States from those countries. Moreover, it’s possible that tariffs could lead to rising costs, changes in manufacturing and logistics processes, and changes to export policies.

All of these things have the potential to impact the financial profile of Tesla and Nvidia, and given how uncertain their near-term operations look, it’s not entirely surprising to see some investors cash out and seek less volatile opportunities.

Image source: Netflix.

Tariffs shouldn’t hurt this media juggernaut

One company that I think should continue to operate at a high level despite any tariffs is streaming leader Netflix (NFLX 3.14%).

Netflix doesn’t import and export physical goods such as semiconductors or car parts. Its primary business is selling subscriptions to its digital content library. On top of that, Netflix’s platform spans more than 190 countries — giving the company broad, diversified reach.

Outside of its subscriptions, Netflix generates revenue from advertising. While advertising spend can exhibit some cyclical characteristics, I see this side of the business as relatively safe as it also shouldn’t be impacted by tariffs in a direct way.

The one caveat that I should make here is that tariffs could lead to higher prices in goods for consumers. If this happens, purchasing power could diminish, leading people to cut discretionary spend in their budget, and that could mean their Netflix subscription.

With that said, I think these dynamics are a bit of a stretch. A subscription to Netflix costs $24.99 per month at the high end. Furthermore, the company offers a variety of tiers, including a more affordable ad-based subscription for just $7.99 per month. I don’t see subscribers outright canceling their membership in the event they need to cut back on costs. If anything, they may simply choose to downgrade to a lower-priced tier.

Netflix carries a premium valuation, but it’s well worth the price

The chart below benchmarks Netflix against a peer set of other media, streaming, and entertainment stocks. At a price-to-sales (P/S) ratio around 10, Netflix is by far the priciest stock in this cohort. I think Netflix’s premium valuation is worth the price, though.

NFLX PS Ratio data by YCharts

Not all of the companies in this peer group are generating consistent profits. Moreover, Walt Disney, which it could be argued is Netflix’s closest comparable competitor at the moment, has struggled mightily over the last few years — with inconsistent turnouts to theaters for its movies, sluggish market share acquisition in streaming, and a seasonal theme parks business.

On the other hand, Netflix’s operating results have been a rocket ship over the last several years.

NFLX Revenue (Quarterly) data by YCharts

The charts above break down Netflix’s revenue, capital expenditures (capex), and earnings per share (EPS) over the last 10 years. In this time, Netflix has made a deliberate choice to migrate away from a library filled with content from other distributors (a licensing model) to a platform that develops its own content.

While the company still offers a host of popular television series and movies outside of the Netflix brand, it has invested significantly in building its own catalogue over the last several years. This strategic decision has been a wise one — as Netflix’s revenue growth is far outpacing the company’s spending, which has led to widening profit margins and accelerated earnings.

To me, paying a premium for a top-performing stock that operates in a high-growth industry such as streaming and has the luxury of circumventing tariffs is a no-brainer. Investors with a long-term time horizon who are looking for more insulated opportunities right now may want to consider scooping up shares in the Netflix growth engine.