The stock market took a deep dive in 2022, creating many incredible buying opportunities. Many stocks are climbing back from those dark chasms in 2023, but it's not too late to take advantage of some rare buy-in windows.
The three stocks below are excellent high-growth businesses trading at significant discounts from their recent peaks. The headline isn't clickbait and I really am showing off some of my favorite stocks. I own all four of them and have also doubled down on a couple of these positions in recent months.
There's no time like the present to take advantage of no-brainer buying opportunities, so let's jump right in.
NASDAQ: ROKU
Key Data Points
Roku is my best buying idea today
Have you heard about the streaming technology veteran Roku (ROKU +0.83%)? Recently, the company has faced some struggles. At the same time, the long-term business opportunity is as inspiring as ever. Hence, the dramatic price drop amounts to a blinking neon sign shouting "Buy now!" to a disco beat. Someone is baking cinnamon rolls in the room. Several puppies are sniffing at your feet, hoping for a treat or some cuddles. You know, an ultra-inviting scene you don't see too often.
Mind you, the neon lights were even brighter a couple of months ago. Roku's shares have made a bit of a comeback, rising 47% from last summer's multi-year lows. Even so, the stock still stands 89% below the all-time peak in July 2021.
The reason for the tumultuous price drop? Increased costs for manufacturing their hardware products, and management not wanting to pass those costs onto customers. This has resulted in a negative gross margin for their hardware over the past six quarters. And if that wasn't enough, the weaker ad market is also hurting Roku's growth prospects.
But despite these challenges, Roku is still providing a valuable service to viewers, content companies and advertisers. They bring all of your streaming services together in one place, and they're reaching a wide audience. In fact, they had 70 million active accounts and 23.9 billion hours of content streamed in the third quarter of 2022.
And the journey to streaming media dominating the video entertainment market has only just begun. As this long-term trend develops, Roku will benefit from the growing market regardless of which streaming service might collect the most subscribers. All of the major players need to support Roku's market-leading platform, or lose millions of potential viewers who already use Roku's media consumption portals.
This is one of the most obvious screaming buys I've seen in years, matched only by the comparably ridiculous Netflix (NFLX +0.13%) discount in the first half of 2022. The maker of Squid Game, Wednesday, and Stranger Things is already proving the doubters wrong and the stock has more than doubled in 8 months.
Roku is poised to follow suit, and then some. This is my favorite stock to buy today, bar none. Feel free to do your own analysis -- in fact, I highly recommend it -- but you can still quote me on that.
NASDAQ: AMZN
Key Data Points
Rumors of Amazon's death, etc.
After a tremendous bull run in the first two years of the COVID-19 pandemic, Amazon (AMZN +0.61%) reversed course in 2022. The endless e-commerce growth slowed down amid inflation-based pressure, putting a stop to Amazon's hiring spree and infrastructure investments. The stock price is down 39% from the end of December, 2021.
It's the end of Amazon's golden age as we know it, according to the bears.
... and I feel fine.
There's no telling exactly when Amazon will get back to its accustomed growth trends, but all signs point to a full recovery at some point. The house that Jeff Bezos built is a global leader in online retail and cloud computing services, and both macro trends have plenty of fuel left in their rocket boosters. They are just pumping the brakes while consumers, businesses, and governments all around the world take care of today's inflationary issues.
Amazon's full-throated return to full health may come in 2024 or 2025, depending on hos the macroeconomic picture shapes up. But it could also happen this year, sending Amazon's stock skyward in a hurry.
If you don't want to miss the upcoming rocket launch, you should ensure that your portfolio holds a few Amazon shares. It's no fun to be left behind on the launching pad when the signs of an upcoming surge are crystal clear.
Learning a lesson with Duolingo
Let me keep this one short and sweet. Many investors see Duolingo (DUOL +3.89%) as a pure play on the coronavirus lockdowns. Share prices are down 53% from September 2021 and short-sellers are flocking to the language-learning expert's stock.
But the company isn't acting like a doomed flash in the pan running past its best-before date.
The number of daily active users rose 51% year-over-year in the third quarter of 2022. Paid subscribers increased by 68%. Top-line revenues are skyrocketing, Duolingo's free cash flows are positive and rising, and the language-training app is just the start of a much larger ambition.
In the long run, Duolingo wants to become a global leader in many other educational fields, from mathematics and history to natural sciences and critical thinking. If you can learn it online, Duolingo wants to teach you. If you can't do that yet, the company wants to figure out how to do it -- and then it will teach you.
Buying Duolingo shares today gets you in on the ground floor of that inspiring vision.
NYSE: DIS
Key Data Points
Walt Disney is back in black
What's old is new again. Walt Disney (DIS +2.03%) is under new management, also know as the legendary leadership of former CEO Bob Iger.
The House of Mouse battled the same headwinds as everyone else in 2022, but under the less-accomplished helm of Bob Chapek. Under Chapek, Disney raised prices on theme park tickets and Disney+ streaming services. Insiders worried that Chapek didn't understand Disney's creative culture as the executive picked a fight with Avengers star Scarlett Johansson. Political missteps in 2022 led to walkouts by disappointed staff members and the loss of Disney World's helpful self-governing status.
So Chapek's errors weighed on Disney's stock last year, amid a global economic crisis. Now, I'm convinced that the company is making all the right moves to get back on track. The long-term growth story is in play again.
Iger may not be able to patch all of Chapek's divots, but he does have 15 years' experience of running this company like a world-class entertainment conglomerate. Meanwhile, the stock price is down 29% from the end of 2021.
With Bob Iger in position to save Disney's bacon, I highly recommend buying the stock right now.
