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Nasdaq OMX Group Inc. (NDAQ - Analyst Report) announced the inclusion of a leading Internet television network – Netflix Inc. (NFLX - Analyst Report) to its Global Index group. Effective Jun 6, this non-financial stock will be part of the Nasdaq-100 index, which is a premium global index including non-financial securities based on the market capitalization.

Nasdaq-100 index comprises the companies of the core trade sector such as computer hardware & software, telecommunications, retail & wholesale trade and biotechnology. These companies are based out of the US and other international countries. Likewise, Netflix will also be a part of the Nasdaq-100 Equal Weighted index (NDXE) and the Nasdaq-100 Ex-Technology Sector index (NDXX).

Netflix a Worthy Pick for Nasdaq-100

Based out of the US, Netflix enjoys a dominant position in the Internet television space with a market capitalization of $12.5 billion. The company is a leading provider of television shows and movies on televisions, computer or other mobile devices both in the US and internationally. Netflix’ strong margins growth over the past several quarters complements its robust outlook, going forward.

Even the shares of Netflix are maintaining a rising trend. Yesterday’s closing price represents a strong one-year return of about 217.1% and a year-to-date return of about 149.3%. The Nasdaq index jumped 23.0% and 17.9%, respectively during the same period.

Apart from a history of outperforming estimates and strong financial results, Netflix’s strong growth momentum is also depicted by the positive estimate revisions that the company has been experiencing thus far.

Following the release of the first-quarter results, the Zacks Consensus Estimate for 2013 surged 34.5% to $1.60 per share in the last 60 days. Moreover, the Zacks Consensus Estimate for 2014 rose 13.7% to $3.08 a share during the same period. Given the healthy upward estimate revisions for both 2013 and 2014, Netflix warrants a Zacks #2 (Buy).

Nasdaq Growing Through Diversification

On the other hand, Nasdaq’s consistent focus on growing its non-transaction base revenues elucidates the company’s strategy of diversification to ease the competitive pressure in the global market. As such, Nasdaq’s organic growth is being helped by the steady market data and technologyas well as issuer and access services revenues primarily due to the increased deliveries of contracts and greater demand for co-location services.

The Nasdaq-100 index is also a part of the company’s Global Market index, which is a primary contributor to the issuer services. Early this week, Nasdaq also received an approval to launch its new interest rate derivative trading platform – Nasdaq NLX. This further underscores the company’s strategic move to attain a competitive edge in Europe.

While Nasdaq carries a Zacks Rank #3 (hold), we maintain a positive stance on Netflix in the near term. Meanwhile, other stocks in the non-financial sector that are outperforming include DTS Inc. (DTSI - Snapshot Report) and AVG Technologies NV (AVG - Snapshot Report), both of which carry a Zacks Rank #1 (Strong Buy).

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