The stock market was brutal last year, especially in the tech sector. The S&P 500 market index fell 18% last year, while the more technology-oriented and volatile Nasdaq Composite lost 33%. The tables have turned since the inflation-fighting efforts started to make a difference in 2023, and many tech tickers have posted strong returns in the last two months.
However, it's not too late to take advantage of the wide-open buying windows that opened up in the bitter fight against inflation. Many excellent stocks are still downright cheap, even as they take off from recent rock-bottom prices. There are many great long-term investments out there right now, probably including some of your favorite growth stocks. Read on to see two of my favorite ideas this week.
Roku
Streaming technology expert Roku (ROKU -7.28%) helped Netflix (NFLX -1.88%) kick-start the digital video market 15 years ago. It is still setting the tone in the domestic market, and it's not a close race. Here's how CEO Anthony Wood described Roku's market position in last month's fourth-quarter earnings call:
"We're the No. 1 streaming platform in the U.S.," Wood said. "We had [about] 38% market share in Q4, which is a higher market share than Samsung and LG combined for TV operating systems. And you compare that to Amazon and Google; they were both single-digit market share."
In other words, Roku is a dominant player in the streaming media platform market. Content services are essentially forced to support Roku's devices and software, because they risk losing a large chunk of their potential target audiences otherwise.
And the rest of the world is likely to follow the pattern American consumers have established. North America is the largest and most profitable streaming market by a long shot, but it's a big world out there, and Roku is already chasing international growth. The company is scaling up its ad sales, content choices, and hardware offerings around the globe, lighting the fuse of a worldwide growth opportunity. Roku is borrowing this idea from Netflix, its old partner and mentor, which scores most of its revenue and business growth overseas nowadays.
So Roku is growing the ad-sales fuel of its active user list and viewer engagement by double-digit annual percentages, supported by positive operating cash flows and a nearly debt-free balance sheet. This little company is going places in the long run, and I think the $9 billion market cap we see today will look quaintly small in a few years.
I'll get an edible hat if the Roku shares you buy today haven't at least quadrupled in value by 2030. I'm playing it pretty safe with that modest forecast, since I don't enjoy most hat flavors.
The Trade Desk
Roku is already a household name, but have you heard of The Trade Desk (TTD 2.14%)? It's a cool company quietly reshaping the digital advertising world.
What makes The Trade Desk stand out is its innovative approach to advertising. The company uses cutting-edge technology and artificial intelligence tools to analyze vast amounts of data. Then that data helps customers make informed decisions about where and how to place ads. The process is highly automated and packed with advanced computer-assisted smarts.
So why is this important? Advertising is how companies get their message out and attract new customers. And with the rise of digital media, reaching the right audience has become more complex than ever. But, at the same time, properly targeted ads can be incredibly effective. That's where The Trade Desk comes in -- it makes it easier for businesses to reach the right people without wasting time and money on toothless ads.
The company tries to deliver effective marketing messages while keeping more money in its clients' pockets and putting less in the hands of ad space providers.
So there's a slowdown happening in the digital advertising world as ad buyers tighten their budget belts. That's terrible news for the online ad sector, including The Trade Desk. At the same time, the marketing flow can't stop entirely, and ad buyers want to maximize the impact of the ad dollars they spend. As a result, The Trade Desk's optimizing services are in high demand, and its top-line sales are skyrocketing:
TTD Revenue (TTM) data by YCharts.
Yet share prices are down 35% over the last year, as if something were seriously wrong with The Trade Desk's business. So let's call it a speed bump and a buying window. Like Roku, this innovative marketing expert looks like a no-brainer buy right now.
