Trading Nation

Netflix is catching up to Disney, and one strategist says its gains aren’t done yet

Trading Nation: Netflix hits all-time high

Netflix is moving in on the mouse house.

After adding billions in the last week, Netflix is edging closer to surpassing the Walt Disney Co.'s market cap. That could happen sooner rather than later if one strategist's forecasts pan out.

"Netflix is really an outperformer," says Katie Stockton, founder and managing partner of Fairlead Strategies, on CNBC's "Trading Nation" on Wednesday. "It's an established leader and does have strong positive momentum."

Netflix has added nearly $10 billion in market cap since reporting earnings at the beginning of the week. At $143.1 billion, it is roughly $8 billion below Disney's $151.3 billion.

But the streaming service has been gaining billions at a rapid pace this year and the trends are pointing to more upside ahead, says Stockton.

"You can see it really has accelerated recently to new highs and that gap that we saw a couple of days ago is a promising development," Stockton explained. "It does suggest that the uptrend is sustainable."

Netflix has added 6 percent so far this week, adding to a nearly 8 percent gain a week earlier. In the year to date, its shares have surged 72 percent, easily making it the best performer on the S&P 500.

"You could arrive at targets that are easily several percent higher from here based on a projection called the measured move, so really just assuming the same trajectory of the trend will maintain itself, so it still looks good to me from a technical standpoint," explained Stockton.

Its shares are well above key technical support level in its 50-day, 100-day and 200-day moving averages. The stock has not closed below its short-term 50-day in nearly two weeks.

"The relative strength, so the ratio of Netflix versus , is also quite strong. There's that outperformance and really shows no signs of exhaustion."

Its RSI, an indicator of momentum, has risen since early April to 63.5 as of Thursday. A level above 70 suggests a stock has been overbought. The measure has fallen since hitting a year-to-date peak of 93 on Jan. 29.

From a longer-term perspective, analyst Boris Schlossberg says Netflix's growth potential is astronomical.

"This is a company that is in 200 different countries already. It's doing native content in 17 different languages. I think the competition from Disney is really a non-starter. It's doing things that are just unique to the world," Schlossberg, managing director of FX strategy at BK Asset Management, told CNBC's "Trading Nation" on Wednesday.

That's not to say Netflix doesn't have its share of problems, says Schlossberg, listing its debt-to-equity ratio and cash burn. But, if it continues to grow as expected, those concerns should abate.

"It's easy to imagine that Netflix could have 200 [million], maybe a quarter of a billion, subscribers in five or 10 years, and that will make all these problems go away," he said. "I think short term, yes, there's massive volatility in the stock. Long term, it just still looks like a win."

Netflix shares were down roughly 1 percent on Thursday. It remains 12 percent higher for April.