The stock market in 2023 is a heavyweight boxer, back on its feet after a tough round. The inflation-powered knockdown in 2022 drove the S&P 500 market index 19% lower. The more volatile and tech-heavy Nasdaq Composite index took an even deeper nap with a 33% value drop.
But those painful, inflation-fighting moves are paying off in 2023, giving the market a chance to show some grit and get back into the fight. The S&P 500 is up 7% year to date. True to its more turbulent historical form, the Nasdaq index has regained more than half of the ground it lost last year with an 18% surge.
So if you want to buy low and sell high (or maybe not sell at all), this looks like a good time to take action. If you've got a spare $2,000, I've got two pugnacious contenders that look ready to go the distance, and they still look affordable today.
Roblox is building a virtual empire
Virtual world builder and game publisher Roblox (RBLX 3.83%), the metaverse platform already navigating the terrain that Meta Platforms dreams of conquering, is standing tall in the recent market turbulence. This digital dynamo doubled its revenues in 2021 and achieved a 16% rise in 2022 despite being caught in the whirlwind of adverse market conditions.
Roblox's share price has done a commendable moonwalk, up 40% year to date in 2023. That surge includes a 21% stumble in April and a 72% slide from the peak prices of December 2021. Yet, this is all part of the dance for growth stocks pushing the envelope.
The company's recent business trends are encouraging. In the first quarter, Roblox posted revenues just over $655 million, a 22% leap compared to the same period in 2022. This was spurred by total bookings that climbed 23% to nearly $774 million. This metric measures the long-term value of Robux subscriptions and prepaid cards, among other things. Roblox's management see it as a more helpful sales measure than the traditional revenue line.
Despite these positive signs, Roblox's net loss deepened to $268 million, which was wider than the $160 million shortfall in the year-ago quarter. Yet, focusing on more dynamic performance metrics, such as bookings, revenue, the number of subscribers, or the daily engagement with the Roblox platform, the company's trajectory looks far more promising. The stock should follow suit in the long run.
Aside from its core gaming experiences and virtual currency sales, Roblox is exploring new revenue streams. The platform has hosted live concerts from major artists like Mariah Carey and Elton John, and is in the early stages of integrating an advertising component into its metaverse.
While other tech giants daydream about running a successful metaverse, Roblox is already living that dream -- and dreaming bigger dreams of robotic sheep. Its early leadership in the metaverse space could just be the launchpad for a stellar long-term performance. Don't be surprised if this virtual virtuoso continues to rise above the noise.
Meet Roku: A streaming giant tuning into the long game
But wait -- there's more! In fact, I'm about to give you my hottest idea in this tumultuous market. Of course, we're talking about Roku (ROKU 5.41%).
You know Roku as the market-leading platform provider in the media-streaming industry. What started as the first set-top devices dedicated to playing early Netflix streams has blossomed into a media maker in its own right, collecting revenues from ad sales, software licenses, and a unique line of smart TV sets.
The stock price of this streaming stalwart is up 28% year to date in 2023. Even so, Roku's shares still stand 90% below their all-time high in the summer of 2021. That looks incredibly cheap, given the high-powered sales growth this company keeps delivering. The top-line, five-year compound annual growth rate (CAGR) sits at 44% despite a fairly modest 19% year-over-year increase in 2022.
Roku's current price-to-sales (P/S) ratio stands at a modest 2.5, which is music to the ears of value investors. Sure, it might have played the part of the overpriced starlet in 2021, but the current valuation suggests that Roku is ready for a prime-time performance. I wouldn't say that the only way is up -- you just never know what plot twists the market might come up with next -- but Roku is the closest thing to a sure thing in my book.
The company holds a privileged position in a rapidly growing market, which is still barely out of the starting blocks in terms of long-term expansion. Most TV viewing in North America is still done on traditional cable or broadcast channels, and that's the most mature streaming market on the planet. Global expansion will follow when America runs out of low-hanging fruit.
Image source: Netflix.
In the grand scheme of things, Roku's current market position and future prospects paint a picture of a long-term winner. So, if you're looking for a stock to bet on in 2023, Roku might just be the ticket. It's got high-octane growth in its blood, the stock hangs out in Wall Street's bargain bin, and Roku is ready to play the long game.
After the extreme highs and lows of recent months, followed by the start of a promising surge, Roku remains my top recommendation. This is the first ticker I look at whenever I find investable cash in the attic, my couch pillows, or the pockets of last summer's beach shorts.
