The article highlights three S&P 500 stocks trading below previous highs: Netflix (NFLX) is down 52%, TJX (TJX) is down roughly 15% from its 52-week high, and DoorDash (DASH) is down 41% from its 2025 high. Netflix's revenue growth has slowed for four straight quarters, from nearly 18% in Q4 2025 to about 12% in Q3 2026, though its forward P/E of 17.7x is below the S&P 500's 19.2. TJX posted a 4% rise in second-quarter comparable sales and 11% adjusted EPS growth, with a forward P/E of 26. DoorDash's second-quarter revenue rose 24% to $4.5 billion, and its forward P/E of 29 compares with roughly 44% annualized earnings growth analysts expect. The article argues these factors could support market-beating returns.
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The article argues that patient long-term investors have been rewarded by Costco, whose share price gained 104.2% over the past five years through Oct. 27, versus 69% for the S&P 500. In the latest fiscal year, which ended in late August, Costco kept a renewal rate of almost 90%, grew paid members about 4% to 84.1 million, and opened 25 warehouses, bringing its total to 939. Operating income rose 12.5% year over year to $11.7 billion. However, the stock trades at a price-to-earnings ratio of 48, compared with a 10-year median of 38, meaning it is not cheaply valued. The author argues that paying a rich valuation for a profitably growing company is better than paying a lower one for a company with less-than-stellar prospects, and favors buying and holding the stock for the long term.
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Netflix shares are down 54% from their highs even though third-quarter revenue rose 12% year over year to $12.9 billion and operating margin hit a record 34.6%. The author argues the real problem is viewing time: Netflix reported no growth in watch hours in the quarter, and its U.S. TV viewing share has been roughly flat for about two years while YouTube's has grown significantly. To counter this, Netflix is shifting toward sports, live events, podcasts, talk shows and shorter series, while competing with YouTube, Instagram and TikTok for attention. The author believes the company can recover if it competes more effectively, and says the stock looks cheap at a P/E of 18 if revenue keeps growing in double digits.
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Apple shares are roughly $350, near their all-time high and up about 29% so far in 2026, while Netflix trades near $62, about 54% below its June 2025 record close. Netflix looks cheaper on forward earnings, with a P/E around 17 versus about 37 for Apple based on analyst forecasts, but its revenue growth has slowed from 17.6% in Q4 2025 to 11.8% in its latest reported quarter, with guidance of 11.5% for Q4. Apple's management forecast fiscal Q4 revenue growth of just 9% to 11%, but its installed base tops 2.5 billion active devices and services made up about 42% of gross profit. The author sees most of Apple's AI payoff still ahead, through features users might pay for and new devices like HomeView, while the foldable iPhone Duo starting at $1,999 adds a pricier tier. The author judges Apple the more durable of the two despite its higher valuation, and says he would build a position gradually.
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