In 2010, video-streaming service Hulu was mulling a public offering, according to Fortune. But the Hulu IPO never happened as Wall Street questioned the firm's business model, which allowed users to watch shows for free at the time.
Because the company is still private, you can't buy Hulu stock at the moment.
However, we uncovered a little-known strategy that lets you invest the top public video-streaming companies. And it doesn't involve paying $156.55 for one share of Netflix Inc. (Nasdaq: NFLX) stock or $940.95 for one share Amazon.com Inc. (Nasdaq: AMZN) stock.
This investment opportunity is trading for under $100 per share and has already climbed 35.64% in the last 12 months. In comparison, an index fund that tracks the Dow Jones Industrial Average would be up just 18.3% in the same time.
And that's just the start of the market-beating returns we expect shareholders to see from this investment.
According to Statista, streaming-video subscription revenue in the United States alone is expected to climb from $8.17 billion in 2017 to $10.36 billion in 2020. That's an increase of 26.80% in just three years.
We're excited to share this profit opportunity with you in just a bit.
But first, I want Money Morning Members to know about the indirect way to own shares of Hulu...
The Indirect Way to Own Hulu Stock
Through subsidiaries, Walt Disney Co. (NYSE: DIS), Twenty-First Century Fox Inc. (Nasdaq: FOXA), and Comcast Corp. (Nasdaq: CMCSA) each own 30% of Hulu, according to Variety.
Trending: Top IPOs to Watch in 2017
In August 2016, Time Warner Inc. (NYSE: TWX) added a 10% stake in the streaming service.
And according to FactSet estimates, all of these stock prices are expected to climb in the next 12 months.
| Stock | Opening Price May 8 | One-Year Price Target | Potential Profit |
| FOXA | $29.14 | $34.59 | 18.70% |
| CMCSA | $39.33 | $44.97 | 14.34% |
| TWX | $98.27 | $106.08 | 7.94% |
| DIS | $112.39 | $120 | 6.22% |
While those are all modest gains, we've found one investment that provides a much larger profit potential in 2017.
Here's the profit opportunity that plays off the strongest Internet streaming companies, along with some of the lesser-known but still profitable companies in the tech industry...
The Best Way to Play Streaming-Video Stocks
The best way to invest in streaming-video companies like Hulu is through the First Trust DJ Internet Index Fund (NYSE Arca: FDN).
For a stock to be included in FDN, a company must generate at least 50% of its annual sales/revenue from the Internet.
An index-eligible stock also must have:
- A three-month average market capitalization of at least $100 million
- A three-month average closing price above $10 if it is not currently in the index
- Sufficient trading activity to pass liquidity tests
The index's composition is reviewed each quarter, and rebalancing takes effect after the close of trading on the third Friday of March, June, September, and December.
The biggest benefit of owning FDN is diversification. This ETF has diversified holdings, which limits the risks associated with owning just one company. Also, it's a more affordable way to own shares of the top streaming services.
And two of the top three holdings for FDN are Netflix (5.33%) and Amazon (8.54%).
Netflix, known for original programming like "Orange Is the New Black" and "House of Cards," reaffirmed in its Q4 2016 earnings report it would produce 1,000 hours of premium original content.
That's an increase of more than 66% from the 600 hours of original content in 2016.
Original programming was part of the reason why Netflix's revenue increased year over year by 35% in Q1 2017.
Amazon is also investing in original programming, with 19 shows reportedly scheduled to debut sometime in the near future. Amazon launched a standalone service for its Amazon Prime Video in April 2016, which costs $8.99 per month.
Though, the real profitability for the e-commerce giant is through attracting more users for Amazon Prime.
Along with streaming movies and television shows, Amazon Prime ($99 per year) provides members with free two-day shipping on eligible purchases, music streaming, unlimited photo storage, and exclusive deals and discounts.
And according to research firm CIRP, Amazon Prime members spend a lot more money than non-members. A 2015 CIRP study estimated Prime shoppers spent an average of $1,200 on Amazon in 2015. In comparison, non-members spent roughly $500 that year.
AMZN CEO Jeff Bezos doesn't disclose how many people have signed up for Prime. However, the company hinted in a 10-K filing in February that it generated $6.4 billion in revenue from "retail subscription services."
Guggenheim Securities projects from that total there are 65 million Prime members.
And to make sure the fund is diversified, FDN also holds shares in top tech companies like Facebook Inc. (Nasdaq: FB) and Alphabet Inc. (Nasdaq: GOOGL).
Here is a list of all of First Trust's 42 holdings:
| Company | Symbol | Classification | Weighting |
| Amazon.com Inc. | AMZN | Consumer Discretionary | 8.54% |
| Facebook Inc. (Class A) | FB | Information Technology | 8.34% |
| Netflix Inc. | NFLX | Consumer Discretionary | 5.33% |
| Alphabet Inc. (Class A) | GOOGL | Information Technology | 5.17% |
| Alphabet Inc. (Class C) | GOOG | Information Technology | 5.01% |
| PayPal Holdings Inc. | PYPL | Information Technology | 4.97% |
| salesforce.com Inc. | CRM | Information Technology | 4.76% |
| Yahoo! Inc. | YHOO | Information Technology | 4.21% |
| eBay Inc. | EBAY | Information Technology | 3.71% |
| Expedia Inc. | EXPE | Consumer Discretionary | 3.10% |
| Citrix Systems Inc. | CTXS | Information Technology | 2.78% |
| Twitter Inc. | TWTR | Information Technology | 2.70% |
| Juniper Networks Inc. | JNPR | Information Technology | 2.60% |
| IAC/InterActiveCorp | IAC | Information Technology | 2.40% |
| E*TRADE Financial Corp. | ETFC | Financials | 2.31% |
| TD Ameritrade Holding Corp. | AMTD | Financials | 2.23% |
| VeriSign Inc. | VRSN | Information Technology | 2.14% |
| LogMeIn Inc. | LOGM | Information Technology | 2.12% |
| Arista Networks Inc. | ANET | Information Technology | 2.02% |
| Veeva Systems Inc. (Class A) | VEEV | Health Care | 2.00% |
| Akamai Technologies Inc. | AKAM | Information Technology | 1.97% |
| TripAdvisor Inc. | TRIP | Consumer Discretionary | 1.78% |
| j2 Global Inc. | JCOM | Information Technology | 1.68% |
| HubSpot Inc. | HUBS | Information Technology | 1.35% |
| Allscripts Healthcare Solutions Inc. | MDRX | Health Care | 1.24% |
| Pandora Media Inc. | P | Information Technology | 1.20% |
| GoDaddy Inc. (Class A) | GDDY | Information Technology | 1.18% |
| 2U Inc. | TWOU | Information Technology | 1.17% |
| Cornerstone OnDemand Inc. | CSOD | Information Technology | 1.13% |
| Cogent Communications Holdings Inc. | CCOI | Telecommunication Services | 1.06% |
| TrueCar Inc. | TRUE | Information Technology | 1.06% |
| Vonage Holdings Corp. | VG | Telecommunication Services | 1.05% |
| Box Inc. (Class A) | BOX | Information Technology | 1.02% |
| Web.com Group Inc. | WEB | Information Technology | 0.96% |
| Ebix Inc. | EBIX | Information Technology | 0.95% |
| NETGEAR Inc. | NTGR | Information Technology | 0.92% |
| 8x8 Inc. | EGHT | Information Technology | 0.86% |
| Blucora Inc. | BCOR | Information Technology | 0.86% |
| Groupon Inc. | GRPN | Consumer Discretionary | 0.86% |
| Sonus Networks Inc. | SONS | Information Technology | 0.67% |
| Endurance International Group Holdings Inc. | EIGI | Information Technology | 0.64% |
| Morgan Stanley Institutional Liquidity Fund - Treasury Portfolio | MISXX | Other | 0.03% |
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