Are you on the hunt for some fantastic deals right now? I've got good news for you -- some stocks are just screaming "buy me" at the moment.
The best part? You don't have to be a Wall Street pro to take advantage of these opportunities. You see, some of these stocks are on sale because the market is a bit wonky right now. They have serious potential for profitable long-term growth, despite investors' recent misgivings in the inflation-burdened economy.
So, whether you're a seasoned investor or just starting out, now's the time to take a closer look at these undervalued growth stocks. I'll give you a couple of my favorite examples below.
Image source: Getty Images.
Amazon
E-commerce veteran Amazon (AMZN -1.65%) looks like a good investment opportunity, despite the recent dip in its stock value. In fact, the price drop only makes me more interested in this resilient stock. Amazon shares trade nearly 50% below the all-time highs from the summer of 2021, including a 29% price drop in the last six months alone.
I understand the red flags market makers are seeing around Amazon, but I disagree when Amazon bears say that the e-commerce and cloud computing booms are behind us. Instead, I'm convinced that those massive growth stories are only getting started and that Amazon's shareholders will reap the rewards of that growth for many years to come.
Facing some challenges in the past year with lower operating profits and slowing growth in its e-commerce business, Amazon is taking steps to prepare for a potential recession. The company recently shored up its balance sheet with an $8 billion term loan while reversing an overly enthusiastic hiring spree and looking for other ways to cut operating costs.
Additionally, the company's cloud-computing platform, Amazon Web Services, continues to perform well and bring in an outsized portion of Amazon's operating income.
While the near-term market may be uncertain, Amazon's long-term growth prospects look promising. Inflation fears and tight consumer budgets are limiting the current growth rates in cloud computing and e-commerce sales, but both sectors should spring back with a vengeance when the economic hardships are behind us.
Meanwhile, Mr. Market acts like Amazon's slowdown could only worsen. I think that's a big mistake and that Amazon's stock will get back on track later this year. Picking up Amazon stock at a 50% discount from recent highs should serve your portfolio well in the long haul.
Roku
The entertainment industry is changing before our eyes. Digital video-streaming services are eating cable TV's lunch; of the traditional pay-TV households in America in 2014, one-third have cut the cord so far, and the sign-offs are only picking up speed.
Image source: Statista.
The so-called streaming wars rage on as every media giant with a pulse wants to take advantage of this relatively newfangled idea. For example:
- Netflix (NFLX 1.74%) started the streaming revolution with the first video-streaming service in 2007, then turned on the rocket engines by turning the free add-on into a separate business in 2011. The company never left the new market's throne, serving nearly 231 million households at the end of 2022.
- Walt Disney (DIS -1.01%) looks like the runner-up, with 162 million global subscribers. The House of Mouse arguably leads the pack if you also include its 73 million Hulu and ESPN+ subscriptions. But there is an unknown amount of overlap since many households pay for a bundled package of Disney's streaming services.
- Amazon Prime Video is most likely the next runner-up, but it's hard to say for sure. The e-commerce giant rarely discloses the number of Amazon Prime subscribers, and data on the video service's viewership is even harder to come by. But Prime Video is clearly a big business with award-winning, big-budget productions. Its global reach may be comparable to Disney's.
I have no horse in...no, wait a second. I have all the horses in this race and would heartily recommend anyone owning Amazon, Netflix, and Disney stock to anyone. Watching the leading content providers jockey for position is fun, and the market is probably large enough to support more than three successful streaming services in the long run.
But you can invest in the booming digital media trend without picking a winner in the streaming wars. That's where Roku (ROKU 1.58%) comes in.
The company has been around since the very start of streaming video. Roku started life as part of Netflix's internet TV business but was quickly spun off into a separate business because the parent company didn't want to make set-top boxes.
Fifteen years later, Roku remains the leading provider of video-streaming platforms in North America, with nearly triple the market share of Amazon's second-place showing. You can't launch a new streaming service without supporting this pervasive platform, which makes Roku a winner as long as the underlying market is growing.
On top of that, Roku is pulling many levers to boost its business prospects even further. International expansion is one key idea, made easier by its dominant position in the world-leading U.S. market. The Roku platform is also a leading ad service, and Roku is making original content, too.
If this sounds like a great business to you, I think you're on the right track. Barring any unforeseen missteps or next-next-next-generation technology developments, Roku is the closest thing to a surefire winner for many years to come.
Yet, the stock is on fire sale.
Roku's market makers are ignoring the blinking neon signs that scream "long-term opportunity!" around Roku, focusing instead on a temporary slowdown in advertising sales. The stock price has fallen 64% over the last year, and shares of this high-octane growth stock are available at the utterly ordinary valuation of 2.8 times sales.
I see a ton of future growth for Roku, with no downside to speak of. In simple terms, Roku looks like the best deal on the market today.
