Regularly adding money to stocks can be one of the smartest financial moves you make. The popular market barometer, the S&P 500 index, has returned 11% per year since 1950, which includes several market crashes along the way.
The key is consistency. Adding $500 per month to growing companies will put you well on the way to retiring a millionaire. Here are two bargain growth stocks that are begging to be bought right now.
1. MercadoLibre
The growth of global e-commerce is expected to hit $58 trillion worldwide by 2028, and one of the fastest-growing e-commerce regions in the world is Latin America. Argentina, Brazil, and Mexico are seeing explosive growth in online sales, serving as a strong tailwind for MercadoLibre (MELI -1.98%) -- the leading online-commerce ecosystem in Latin America.
MercadoLibre connects buyers and sellers through its online marketplace. It offers mobile payments both online and at the point of sale, consumer credit, and shipping and advertising services to small businesses.
A vast number of transactions in Latin America are still completed with cash, which lends to a long runway of growth, and this is clearly reflected in the company's recent performance. In the third quarter, revenue and total payment volume were up 61% and 76%, respectively, in local currency. MercadoLibre's fintech business reached 40 million active users, representing the most quarterly additions to its ecosystem in the last two years.
What's more, MercadoLibre is reinvesting in marketing and technology for more growth while reporting an improving operating profit margin. Its recent growth is testament to the company's competitive advantages in selection, price competitiveness, and the overall effectiveness of its merchant services.
The market is severely undervaluing the company's improving profitability. Despite continuing to post robust growth, the stock sells at a low valuation of 27 times trailing free cash flow. This stock is a good bet at these levels.
2. Roku
The growing adoption of smart TVs and streaming is still a huge opportunity for leading developers of TV operating systems. The market for connected TVs is expected to grow about 15% per year through 2026, according to Mordor Intelligence.
This opportunity is attracting many competitors, including Apple, Samsung, Alphabet's Android, and Amazon, that offer their own devices and software. But Roku (ROKU 1.91%) has the leading market share in the U.S.
The stock fell hard over the past year, as sales of TVs dropped amid supply chain issues and inflation pressuring consumer spending. But these headwinds will eventually clear and send Roku off to the races.
Investors only need to look at the company's recent numbers to see the value here. Even with lower sales of streaming devices dragging down Roku's growth, the company's platform segment, which includes advertising revenue, increased by 15% year over year in the third quarter.
| Segment | Third Quarter 2022 | YoY Change (Decline) |
|---|---|---|
| Platform revenue | $670.4 million | 15% |
| Player revenue | $91 million | (7%) |
| Total revenue | $761.4 million | 12% |
Data source: Roku. YoY = year over year.
Roku's trailing revenue of $3.1 billion is a small fraction of the $60 billion that is spent on TV advertising in the U.S. As more households cut cable in favor of streaming, Roku's best days are still ahead. The number of active accounts on Roku grew 16% year over year last quarter, with average revenue per user growing 10%. Growth should be even stronger when TV sales pick up again.
While Wall Street worries about the near-term advertising market and TV sales, the stock is trading at its cheapest price-to-sales valuation since going public five years ago. Roku could be deeply undervalued at these levels.
