🦉 The Night Owl Newsletter for July 20th

INVESTOR ALERT: Tiny “$3 AI Wonder Stock” on the Verge of Blasting Off (From Traders Agency)

3 Streaming Stocks to Watch as Subscribers Drive Growth

Written by Chris Markoch

The retail sales report for June showed a slight increase in consumer discretionary spending. One month doesn’t make a pattern, but it’s at least a temporary relief for companies that rely on consumers willing to stretch their budgets for their products and services.

One area that’s remained strong among consumer discretionary stocks is streaming services. Despite claims of streaming fatigue, many consumers find that they’ll get rid of many things in their budget before they give up their streaming services.

The companies that offer these services have noticed and found a way to be more profitable. They offer a discounted monthly service price and make up for it with ad revenue.

As we move into earnings season, investors will hear which of these companies stand out among the rest. One of the key metrics they’ll use to judge that performance will be the company’s subscriber numbers. Here are three companies to watch.

Analysts Don’t Care That NFLX Stock Is Expensive; Should You?

Netflix Inc. (NASDAQ: NFLX) invented the streaming category and in the last few years, the company’s strategic pivots to increase monetization without alienating its subscriber base is truly impressive.

That growth has continued in 2025. The company’s first-quarter earnings report delivered 12% year-over-year (YOY) revenue growth and 27% YOY earnings per share (EPS) growth, setting the bar high for the company’s earnings report, which was released on July 17. Analysts have been projecting 22% earnings growth for the full year.

Since the beginning of July, investors have been unplugging from NFLX stock. That’s not surprising, the stock is priced to perfection and, at 59x earnings, it’s trading at about a 30% premium to its historic average.

Being priced for perfection may be why NFLX stock is pulling back from its all-time highs. But many investors thought the same thing when the stock was around $1,000. Throughout July, Netflix has received several bullish upgrades, suggesting analysts believe the company will continue to post strong results that can support a move to new highs.

NFLX stock chart

Streaming Is a Key Piece to Disney’s Comeback Story

The Walt Disney Company (NYSE: DIS) is in the middle of an impressive comeback. That comeback was almost derailed in early August when tariff and inflation concerns dropped the stock to its 52-week low.

However, DIS stock has come roaring back and is up more than 43% in the last three months. A key reason for that is the company’s streaming operation, which turned a profit for the first time.

Disney isn’t a pure-play streaming stock by any means. Streaming via its Disney+, Hulu and ESPN+ platforms accounts for only about 25% of the company’s annual revenue. Nevertheless, it’s an integral part of the company’s business model because it provides predictable revenue that is more defensive than its theme park and cruise line operations.

Several analysts raised their price targets on DIS stock in July. At 24x earnings, the stock has attractive value, which includes a recently reinstated dividend. However, investors may have to wait for the company’s earnings on August 5 for a catalyst that could send the stock to multi-year highs.

DIS

ROKU Provides the Lock and the Key, But Is There Enough Growth?

Roku Inc. (NASDAQ: ROKU) is intriguing because it offers consumers both the lock and the key to streaming. In this case, the lock is its smart TVs and Roku sticks, which are the gateway to streaming services. The company offers the top-selling TV operating system (OS) in the United States, Canada, and Mexico.

The key is how the company monetizes viewership. This is done in several ways. The most obvious is through ad revenue. Roku sells ad space during programming on The Roku Channel and keeps 100% of the ad revenue for content it owns or licenses. However, the company also gets a percentage of ad revenue for third-party content. It also receives a commission on every subscriber it brings to other streaming services.

This combination positions Roku to continue winning the connected television (CTV) space. However, ROKU stock is up 55% in the last three months and is within 2.4% of its consensus price target of $92.67.

Several analysts have offered higher price targets, but Roku is not yet profitable. Therefore, investors should be cautious when trading the stock before its earnings report on July 30. The MACD isn’t showing a strong signal either way, but since the recent trend was bullish, it suggests the stock may be losing its upward momentum.

ROKU Stock chart

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Crypto Genius: Forget bitcoin – this will be so much bigger (Ad)

New Hampshire just launched a Strategic Crypto Reserve — and James Altucher says it’s the first sign that “Trump’s Great Gain” has officially begun.

Altucher believes select cryptos could turn $900 into $108,000 over the next 12 months — and he’s laying out the full gameplan in a new presentation.

SEE ALTUCHER’S TRUMP CRYPTO PREDICTION HERE

America Wants Drone Dominance: Are These Stocks Ready to Soar?

Written by Chris Markoch

The recent passage of the Trump administration’s One Big, Beautiful Bill provides $150 billion in additional defense spending. That pushes total U.S. defense spending close to $1 trillion. That’s a lot of zeroes to digest. But if you’re an investor, there’s a reason to believe you can profit from this additional spending.

That’s because the Pentagon is in the early stages of a five- to ten-year push to modernize the U.S. military. A key part of that effort will be a shift toward drone-centric and autonomous systems.

This focus means looking beyond some of the large-cap defense stocks like Lockheed Martin Corp. (NYSE: LMT) and General Dynamics (NYSE: GD). These companies will have a seat at the table, but the table has a few more place settings. Those will be occupied by smaller, niche companies that specialize in the drone industry.

Several of these aerospace stocks have shot higher in the past few months, which is giving some investors that FOMO (fear of missing out) feeling. There’s no doubt that risk-tolerant investors with a long timeline should consider investing in this sector.

But you may not have to go all in just yet. Several of these stocks have extended valuations.

Over the next several years, investors can expect some ups and downs that will allow a position to build over time.

Here are three stocks worth considering and how they fit into this emerging sector.

Investors Can Lean into AeroVironment’s Strong Balance Sheet

Any time investors are considering speculative stocks, they should keep a close eye on the balance sheet. That’s a good reason to consider AeroVironment Inc. (NASDAQ: AVAV).

The company is an industry leader that is already supplying small tactical drones to the United States military and its allies.

That gives AeroVironment something that many companies in this sector lack: growing revenue and positive earnings. In its last quarter, revenue was up 39% year-over-year (YOY), and earnings per share increased by a whopping 274% YOY.

Those numbers were a key reason AVAV stock gapped higher after its June earnings report. However, the company isn’t resting on its laurels and announced plans to raise up to $1.5 billion in new capital.

AVAV stock is down about 6% since that announcement. That’s not surprising. Raising capital in this way is often dilutive to a company’s share price in the short term. However, investors may want to buy this dip.

To begin with, the company has a strong backlog backed by expanding margins. AeroVironment isn’t raising cash to stay afloat; it’s doing so to manage that growth.

From a tactical perspective, AVAV stock is extended trading at 78x forward earnings. Investors will often pay a premium for industry leaders in an emerging sector, but with the stock up more than 71% in 2025, this is a healthy pullback that will give investors time to enter or add to a position.

Red Cat Offers High-Risk and High-Reward

Red Cat Holdings (NASDAQ: RCAT) is a small-cap stock focusing on rugged, military-grade drones through its Teal Drones subsidiary. The company has won contracts with the U.S. Army and the U.S. Customs and Border Protection. However, this just emphasizes the lumpiness that can come with government funding cycles.

That shows up on the company’s balance sheet. The company is not profitable and is generating very little revenue. It’s projecting around $80-$120 million in revenue for 2025 and just completed a $30 million equity offering in April.

With the equity offering behind it, RCAT stock has gone up more than 100% in the last three months. Some of that, however, may be from short covering as the stock has over 20% short interest.

The upside could be meaningful if Red Cat can grow into its valuation and convert contract wins into scalable revenue. For risk-tolerant investors, RCAT stock is a long-term moonshot worth monitoring. However, scaling in slowly may help mitigate near-term downside.

Kratos Defense: Loaded With Potential, But Overvalued

Since the passage of the One Big, Beautiful Bill, the Pentagon has expressed its intention to “unleash U.S. drone dominance.” Kratos Defense & Security Solutions (NASDAQ: KTOS) may play a key role in making this a reality.

The company’s experimental Valkyrie program features low-cost, autonomous tactical drones that can be deployed in swarms. The Pentagon has prioritized this for many years.

While the Valkyrie program offers great promise, the company is currently generating revenue from target drones and satellite communication systems for the U.S. military. Kratos generated approximately $1 billion in revenue in 2024 and is profitable.

The company’s positioning between small-cap agility and large-cap infrastructure would seem to make KTOS stock a Goldilocks option for investors. However, after surging 98% in 2025, the stock looks overvalued and overbought.

Rising short interest in the last month makes it likely that the stock will drift lower into earnings, which may set up a buying opportunity.

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INVESTOR ALERT: Tiny “$3 AI Wonder Stock” on the Verge of Blasting Off (Ad)

Right now, we’re witnessing a monumental shift in the world.

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3 Retailers Poised to Outmaneuver Tariff and Recession Concerns

Written by Nathan Reiff

Several months into the Trump administration’s unfolding tariff program, investors are still unlikely to have much clarity surrounding the impact of current and potential future levies. However, as inflation creeps upward once again and analysts continue to forecast a decent likelihood of an impending recession, it would seem to be an increasingly challenging time for companies dependent upon consumer spending.

The SPDR S&P Retail ETF (NYSEARCA: XRT), an exchange-traded fund (ETF) and benchmark for the U.S. retail industry, has partially recovered from the initial April tariff shock but remains down more than 1% year-to-date (YTD).

At the same time that some retailers are struggling to adapt to shifting economic conditions and tariff landscapes, others may be able to buck the trend and thrive thanks to their unique focus or business model. Below, we explore three companies—an off-price retailer, an e-commerce provider, and a specialty footwear firm—that analysts believe could outperform despite a challenging environment.

Resilient Model, Top- and Bottom-Line Growth, Dividends…But Valuation Risks

TJX Companies (NYSE: TJX), the company behind discount and closeout shops like T.J. Maxx, Marshalls, and HomeGoods, has only slightly outperformed the XRT since the start of the year. TJX has maintained brick-and-mortar strength even as shopping trends have shifted online, thanks to its distinguished model, in which customers search through stores for discounted finds. The firm also maintains its cost efficiency by focusing on overstocked inventory, which it can then turn around and sell below competitor prices.

The proof is in TJX’s earnings, and the company recently came out ahead of analyst predictions for both revenue and EPS. Revenue climbed by more than 5% year-over-year (YOY), a sign that both U.S. and, increasingly, international operations are growing well. TJX also offers the bonus of a solid dividend, with a yield of 1.41% and a healthy payout ratio suggesting continued long-term dividend sustainability. Management recently boosted the company’s dividend payout, further solidifying optimism in the company’s ability to withstand external pressures.

Nineteen out of 20 analysts see TJX shares as a Buy, predicting that the stock could rise by more than 17% based on a price target of $141.06. Investors should keep in mind, however, that with a trailing P/E ratio of 28.7, TJX stock may not offer the most compelling value at this time.

High-End Retail Platform and Major Revenue Improvement

Global-e Online Ltd. (NASDAQ: GLBE) offers a cloud-based platform to facilitate international retail transactions. The company doesn’t interface directly with consumers, but rather connects businesses via its services. GLBE’s inclusion in a list of retail-focused firms able to successfully navigate a complex tariff situation may be surprising, given its international focus. However, the company’s business clients are predominantly high-end and luxury brands, including Hugo Boss, Parisian shoe brand Carel, Iconic London, Loquet, and others.

Customers seeking out the brands doing business with Global-e likely have significant flexibility on their discretionary spending, with or without tariffs. What’s more, Global-e is expanding its partnerships in a big way—the company recently announced a major multi-year agreement with commerce platform Shopify Inc. (NYSE: SHOP)—a move that should help it continue to grow its top line. There is already noteworthy momentum there, as Global-e announced quarterly revenue growth of 30% YOY for the latest quarter, coming in above analyst predictions.

Analysts are bullish on GLBE shares, with 12 out of 13 calling them a Buy. A consensus price target of $48 per share suggests 49% upside potential.

Sales Growth and Realistic (But Positive) Projections Drive Boot Barn’s Rally

Boot Barn (NYSE: BOOT) is a footwear and apparel retailer that serves customers interested in Western-inspired fashion and those looking for durable workwear. Consolidated same-store sales growth for the latest fiscal year was 5% YOY, and the firm is looking to increase its store count by 14%.

The company, which relies on products from China and Mexico, has taken a sensible approach to pricing and forecasting given the tariff uncertainty. Even still, it is projecting 13% growth in total net sales.

Unlike the two companies above, BOOT shares are notably up in recent months. The stock has risen by almost 9% YTD and an impressive 27% in the last year.

Analysts remain optimistic about future growth despite the recent rally; a consensus price target close to $174 means the company has over 5% in upside potential based on the latest predictions. Twelve out of 13 analysts say BOOT is a Buy.

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