Some of the best investments take their sweet time to develop. For example, Advanced Micro Devices(NASDAQ: AMD) entered the Intel(NASDAQ: INTC) compatible processor market in 1996, and then the stock largely trailed behind the S&P 500(SNPINDEX: ^GSPC) for the next 20 years. After that disappointing period, the chip designer roared back to life with a 5,000% return in nine years. The leading market index merely tripled over the same period.
I could tell you similar rags-to-riches stories about e-commerce giant Amazon or electric car maker Tesla. Apple(NASDAQ: AAPL) has the largest market cap of any stock today, but nearly went out of business in 1997. The list goes on. Like I said, some of the stock market's top names have made it through hard times.
On that note, several of my favorite growth stocks aren't getting any market love at the moment. Media-streaming technology developer Roku(NASDAQ: ROKU) is trading 84% below the thrilling record prices of 2021, and freelance services reseller Fiverr International(NYSE: FVRR) has plunged 92% from a peak in the same era.
I'm not disheartened at all. Instead, I keep adding to my Fiverr and Roku positions while the stocks are ridiculously cheap. I'm talking about two top-quality companies here with decades of potentially market-stomping growth ahead of them.
From lockdown darlings to discarded heroes
Both Roku and Fiverr soared to incredibly generous valuations during the lockdown portion of the coronavirus pandemic. One helped bored people while away the hours with digital media services; the other appealed to entrepreneurs with business ideas and time to spare. Many investors expected both companies to wither away when Americans weren't stuck at home anymore.
So the stocks plunged in unison, but the underlying businesses are still thriving.
Roku's global streaming ambitions
Roku's year-over-year user growth never slowed down below 12%, even in the darkest days of the 2022 inflation crisis. The company had 89.8 million active accounts by the end of 2024, up from 60.1 million when the stock price peaked at the end of 2021. That's a three-year gain of 49%, right in line with Roku's revenue growth over the same period.
The company is following the Netflix(NASDAQ: NFLX)global growth playbook in many ways. Roku's former parent company started as an all-American business before spreading its media-streaming wings worldwide between 2011 and 2016. Roku has launched services and hardware sales in key markets like Latin America, France, and the United Kingdom, but the truly global push is yet to come.
The combo of soaring revenues and falling share prices has led Roku's stock to a price-to-sales ratio (P/S) of just 2.8. Entertainment peers like Apple, Netflix, and Spotify(NYSE: SPOT) are trading at 6.8 to 10.7 times trailing sales. That range would be a more reasonable market value for Roku, which is growing its top line faster than any of the aforementioned digital media stars.
I'm more than comfortable buying Roku stock on the cheap. This stock should soar in the long run, as Roku turns profitable and continues to expand across the world stage.
Fiverr is changing how the world works (while investors nap)
Fiverr isn't playing around. The company aims to "change how the world works together." That's an epic mission statement and a grand ambition, addressing a mostly offline freelancer recruitment market with a yearly value of $247 billion -- just in the U.S.
With just $391 million of total revenues last year, Fiverr is barely scratching the surface of this immense target market. The company is also profitable and paid off its long-term debt in 2024. This company has all the makings of a skyrocketing market darling, but you already saw the stock moving in the opposite direction.
I don't know what to tell you about that Streetwide mistake. Fiverr's gig economy business is booming in all the right places, but the stock trades at the minuscule P/S ratio of 2.4. You can also assess Fiverr's stock in the light of its free cash flow (trading at 11.5 times trailing FCF) and earnings (8.7 times forward earnings estimates).
But you know what they say about the stock market being a popularity contest in the short term and a measure of business value in the long run. Market makers will surely come to their senses someday, lifting Fiverr's stock to a more reasonable valuation. In the meantime, I can keep buying more of this top-notch growth stock at a deep discount. You don't have to follow my lead, but I think you'll be kicking yourself over this missed opportunity in a few years if you don't at least consider picking up a few Fiverr shares in 2025.
Don’t miss this second chance at a potentially lucrative opportunity
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Amazon, Fiverr International, Intel, Netflix, and Roku. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Fiverr International, Intel, Netflix, Roku, Spotify Technology, and Tesla. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
