Grab your favorite beverage, find a comfy chair, and let's talk stocks. Not just any stocks, mind you, but my two absolute favorites right now. I'm talking about the kind of stocks that make you want to do a little happy dance every time you check your portfolio.
Both of these companies are high-octane growth rockets with potential for years of fantastic gains. I suppose you could consume one's products while enjoying the other's services, but they don't have much else in common.
Roku is a mispriced media-streaming gem
I've been recommending (and buying) Roku (ROKU -1.70%) since the media-streaming technology stock fell off a cliff in 2021. The stock has mounted an inspiring comeback this year, gaining more than 60% year to date, but Roku still looks tremendously undervalued.
Sure, times are tough right now. Most of Roku's revenue doesn't come from streaming-device sales or software-license royalties -- but from ad sales. The popular media-viewing platform plugs ad space into the platform for selecting which streaming service to view next and also runs the Roku Channel as a fully ad-supported option.
Advertising sales have been hard to come by since the inflation crisis started. Ad buyers would rather spend their marketing budgets when consumers are ready to open their wallets and buy something new. So it makes sense to slap a discount label on Roku while the ad market is going through a downturn.
However, the video-streaming market has a lot of growth left to unpack, including a massive international market that Roku hasn't tapped so far. Old-school broadcast and cable TV still dominate the media industry, even in mature streaming markets like America.
Ad sales will surely swing back again. The upswing could be just around the corner.
Inflation rates have been sliding back from last summer's peak rates, month by month. The inflation-fighting federal interest rates stopped rising in June, ending an 11-month streak of consistent rate hikes. All told, the stage seems to be set for a marketwide recovery, with particularly promising prospects in the heavily discounted growth-stock sector.
That's not just good news for investors, but also for businesses with sales that were hamstrung by surging inflation and painful anti-inflation policies. Free-spending consumers should be more commonly seen as the economic pressure fades out. And that means a spirited return to generous advertising budgets.
A recent report from TVREV, a market analysis firm, suggests that streaming-video services will surpass the ad spending in traditional TV formats by 2025, and streaming ad spending should more than triple over the next five years. By then, free ad-supported TV (FAST) services could be the largest ad segment of them all, with a 42% share of total video ads:
Image source: TVREV.
Market makers gave Roku's stock a brutal haircut in 2021 and 2022 as if its long-term business prospects were melting away. But the ad market's downturn should be short-lived, and Roku's media-streaming growth story is still in its early chapters.
There's a huge mismatch between Roku's market perception and its long-term growth prospects, signaling a strong buy with neon lights, smoke signals, and a thundering marching band. The parade has been going on for nearly two years, but it's not too late to take action.
Celsius isn't your average energy drink
Health-conscious energy-drink maker Celsius Holdings (CELH -3.34%) could hit the spot for thirsty investors this summer.
Now, you might be thinking: "Energy drinks? Isn't that old news?" But hear me out. Celsius isn't your average energy-drink company.
Their beverages are designed to act like a personal-trainer-in-a-can, boosting your metabolism to burn more calories and body fat. It's the perfect jolt of inspiration for those with active lifestyles or anyone who just wants to feel a bit more energetic -- all based on natural ingredients.
Celsius has been on a tear recently, with revenue soaring 95% year over year in the last quarter. And it's not just sales that are skyrocketing; earnings more than quadrupled at the same time. If that doesn't get your investment senses tingling like a shot of pure caffeine, I don't know what will.
But wait, there's more. Celsius recently welcomed soft-drink giant PepsiCo (PEP -0.13%) on board as a minority stakeholder and North American distribution partner with an option for global expansion. With Pepsi's massive reach across various markets and store types, Celsius is gearing up to conquer the world, one energy drink at a time.
If this arrangement sounds familiar, maybe it reminds you of sector leader Monster Energy striking a similar arrangement with Pepsi's arch-rival Coca-Cola in 2014. That deal boosted Monster's fortunes dramatically, both domestically and abroad, and Celsius should also see strong sales growth under Pepsi's wing.
Despite the stock's recent surge, there's still plenty of opportunity for continued growth. The energy-drink market is projected to balloon to $178 billion by 2030. With trailing revenue of just $780 million today, Celsius holds a tiny slice of this enormous pie. With its unique product, health-focused marketing message, and expanding distribution, Celsius looks well-positioned to grab a much bigger piece over time.
Sure, Celsius' stock price is near all-time highs, but don't let that deter you. Remember, Rome wasn't built in a day, and neither are great investments. With its impressive growth, powerful partnerships, and massive market opportunity, Celsius may just be warming up.
