Netflix Has Had Its Run – Up 53.6% In 4 Months Since Top Gun Recommended the Shares

It’s been about 4 months since Top Gun recommended Netflix shares on Tuesday July 25 when they closed at $18.78.  They closed today at $28.84 – up 53.6% – and I think it’s time to sell. 

The shares seem to be facing some resistance at the $30 level and at their current price the shares are more fairly valued.  They are trading for about 24 times my estimate for 2006 free cash flow and 19 times my estimate for 2007 free cash flow.  Given their growth rates I think the stock is worth $35.  At $29 we are starting to approach fair value, about a 17% discount, and I think there are now better opportunities in the market. 

Let’s not be greedy.  Sell Netflix (NFLX) for a 53.6% profit. 

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