March 18, 2025

These 3 Attractive Stocks Keep Cruising Higher

The market has thrown a tantrum over recent weeks, with tariff talks and other potential economic implications shaking sentiment.

But despite the negativity, several stocks, including Verizon Communications VZ, Gilead Sciences GILD, and Alibaba BABA, have shaken off the woes, showing stability and relative strength throughout the period.

Image Source: Zacks Investment Research

For those interested in momentum, let’s take a closer look at each.

Gilead Product Demand Booms

Gilead Sciences’ latest set of quarterly results came in nicely above expectations, with the company exceeding both Zacks Consensus EPS and Sales estimates by 14% and 7%, respectively. Solid growth was also delivered, with earnings up 11% alongside a 6% sales bump.

Importantly, the company’s offerings continue to generate strong demand, with total product sales of $7.5 billion exceeding our consensus expectations on the metric in seven consecutive periods.

As shown below, the beats have regularly been outsized as of late, undoubtedly a positive trajectory.

Image Source: Zacks Investment Research

In addition, sizable margin expansion has unlocked higher profitability for the company in a big way, with its products gross margin shooting higher to 79% from 70.9% throughout its latest period. Please note that the chart below tracks values on a trailing twelve-month basis.

Image Source: Zacks Investment Research

Analysts positively revised their current year EPS expectations following the release, a bullish sign that alludes to further positive price action.

Image Source: Zacks Investment Research

Verizon Keeps Generating Cash

Verizon’s strong cash-generating abilities have positioned it at the top of many income-focused investors’ lists, with the company close to joining the elite Dividend Aristocrats club thanks to years of consistently higher payouts.

Below is a chart illustrating the company’s dividends/share on a quarterly basis. FY24 free cash flow of $19.8 billion grew 6% year-over-year.

Image Source: Zacks Investment Research

Valuation multiples are considerably cheap relative to the S&P 500, with the current 9.9X forward 12-month earnings multiple reflecting a 52% discount. The stock is more of an income-driven play, not targeted for high-growth expectations.

Image Source: Zacks Investment Research

Its latest set of quarterly results came in above expectations, exceeding both Zacks Consensus EPS and Sales estimates modestly. Continued customer growth has been a nice tailwind for the company, with its broadband market share continuing to grow.

Netflix reported exceptional first-quarter 2024 earnings of $5.28 per share, outperforming the Zacks Consensus Estimate by a staggering 17.07%. This marked a remarkable 83.3% surge from the preceding year, reflecting the company's undeniable prowess in the streaming industry.

The streaming behemoth saw revenues soar to $9.37 billion, showcasing a robust 14.8% year-over-year growth that surpassed the consensus expectations by 1.18%. The surge can be attributed to a strategic combination of revenue initiatives, such as cracking down on password-sharing, introducing an ad-supported tier, and implementing recent price hikes on select subscription plans.

The Growth Engine: Subscriber Momentum

Netflix ended the first quarter with a solid user base of 269.6 million paid subscribers spanning over 190 countries globally, depicting a commendable 16% annual increase. The company experienced a considerable influx of new customers, with a strong presence noted in the United States and Canada.

The quarter saw a substantial uptick of 9.33 million paid subscribers worldwide, accompanied by a 1% increase in average revenue per membership (ARM) on a reported basis and a robust 4% growth on a foreign-exchange neutral basis. This impressive performance follows the addition of 1.75 million paid subscribers in the corresponding period last year.

In a bid to diversify its content offerings, Netflix attributed its success to exclusive intellectual property like original series, including critically acclaimed titles like "Griselda," "3 Body Problem," "Avatar: The Last Airbender," "Love Is Blind Season 6," "American Nightmare," and "Dave Chappelle: The Dreamer."

The platform also noted significant viewership of U.K. content and original Korean titles, underscoring the global appeal of its diverse content library.

Expanding Horizons and Strategic Shifts

In a bold move to solidify its dominance in the streaming landscape, Netflix is venturing into new territories such as live events. The company recently secured a groundbreaking $5 billion deal to exclusively stream WWE's flagship wrestling show, "Raw," disrupting traditional broadcast paradigms that have stood unchallenged for over three decades.

Furthermore, Netflix forged a strategic partnership with Rockstar Games’ "Grand Theft Auto" franchise, signaling its foray into the lucrative video game sector—a move that is poised to redefine the boundaries of entertainment convergence.

A surprising announcement by Netflix detailed its decision to discontinue reporting paid quarterly membership and revenue per subscriber starting Q1 2025. This strategic pivot aims to shift investor focus towards long-term trends rather than short-term fluctuations influenced by transient factors like programming changes and economic volatility.

While tech titans like Apple and Amazon maintain secrecy around their streaming subscriber figures, Netflix's transparent approach sets it apart in an industry where data privacy often trumps transparency.

Shares of Netflix have exhibited extraordinary resilience, delivering a robust 25.4% YTD return that eclipses the performance of industry stalwarts like Apple, Amazon, and Disney.

Unveiling Netflix's Segmental Revenue Landscape

Breaking down its regional revenue streams, Netflix's United States and Canada segment boasted revenues of $4.22 billion, representing a commendable 17.1% year-over-year increase and accounting for 45.1% of total revenues. The ARPU in this segment rose by 6.9% from the prior year.

The European, Middle Eastern, and African market witnessed revenues of $2.95 billion, marking a 17.5% annual upsurge and contributing 31.6% to the company's overall revenues.

In the Latin American region, revenues amounted to $1.16 billion, with an 8.9% year-over-year increase and a subscriber base of 47.72 million.

The Asia Pacific segment recorded revenues of $1.02 billion, showing a strong 9.6% growth, underscoring the company's burgeoning presence and subscriber base in this lucrative market.

Netflix's Financial Report for Q1 2024 Netflix's Financial Performance Shines with Steady Growth

Alibaba Shares Bounce Back Big

Alibaba shares have been notably strong since late January following news of its new AI model that claims to surpass DeepSeek. The company’s EPS outlook remains bullish across the board, a big positive concerning near-term share movement.

Image Source: Zacks Investment Research

Importantly, its AI-related product revenue maintained a triple-digit year-over-year growth pace for the sixth consecutive quarter throughout its latest period. BABA’s sales growth has overall shown a modest acceleration over recent periods, as shown below.

Zacks Investment Research
Image Source: Zacks Investment Research

The stock’s recent momentum has undoubtedly been welcomed among shareholders following years of negative price action, up nearly 75% in 2025 alone.

Bottom Line

Despite the market’s sour mood over recent weeks, all three stocks above – Verizon Communications VZ, Gilead Sciences GILD, and Alibaba BABA – have shaken off the negativity, showing relative strength against the S&P 500.

For those interested in momentum, all three deserve a closer look.

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