Don't Bet Against Netflix: 5 Reasons the Stock is a Winner

Netflix is on a roll, but try telling the short-sellers that.

The Internet video company recently expanded into Canada. Now, its taking its streaming video services to Latin America and the Caribbean.

Founded in 1997, the Los Gatos, California-based company (NASDAQ: NFLX) has more than 23 million subscribers, and in April Netflix reported its first-quarter profit soared 87 percent on a revenue jump of 46 percent. Wall Street has roared in approval, as shares of Netflix are trading near a 52-week high, at $289.63, increasing almost three-fold in the past 12 months.

Yet not everybody is buying into the hype.

Short sharks loom, as one-fifth of the company's stock float is sold short -- meaning they think that Netflix stock that's been on a meteoric ride is due to come crashing back to earth.

But think before you bite and join that short hype and get burned, since Netflix has some advantages as the company rolls out its worldwide launch.

Consider these five reasons Netflix will be a big hit in the U.S and abroad into the future:

1) Latin America has many rapidly growing pay TV markets and Netflix is well positioned with its globally-recognized brand and service to win millions of customers with attractive pricing. Netflix says it will expand to 43 countries in Latin America and the Caribbean later this year, offering unlimited TV shows and movies over the Internet for a base monthly subscription price.

2) Netflix is committed to not sacrificing price for marketshare, meaning those shorts are expecting Netflix will have to deeply discount its services. The company understands keeping pricing in place is the key to its profitable long-term future.

3) Netflix will grow internationally faster than many investors think. Because the company moved to streaming media in 2007 as its primary platform over DVD-by-mail as it originally started with in 1997 it is nimble, and can move very fast into new markets with low cost.

4) Skeptics say Netflix has to pay too much for the content it distributes but those skeptics should consider that the bigger Netflix grows, the better deals it gets for distributable properties including television shows, documentaries and feature films. It's the Wal-Mart supply model, in that girth gets good deals. Translation: the bigger and faster Netflix expands worldwide, the better deals it gets on the properties it distributes.

5) Cable is on the way out. Netflix has plenty of growth opportunity remaining in the U.S. As cable gets more expensive with more channels, customers increasingly want to pay only for what they want to watch. Netflix is an affordable option, and as more households gain devices to deliver streaming media to the family, the more the company secures its long-term profitability.