These Stocks Are Down More Than 35%, and I'm Not Worried at All

I'm about to show you three stocks that have fallen more than 35% from their all-time highs in 2021. Actually, two of them are down much lower than that.

Some might say that it's high time to cash in what's left of these formerly lofty investments and move on to more stable stock picks. The share prices must have fallen for good reasons, right?

But I'm not worried at all. These three companies have a long-term home in my personal stock portfolio. In fact, I have doubled down on this trio during this lengthy market slump, and I often recommend others do the same. In my view, they are among the best stocks to buy in this market.

So read on to see why I'm so confident in the long-term prospects of Netflix (NFLX -0.63%), Roku (ROKU -10.29%), and Fiverr International (FVRR 3.74%). Their low share prices may look like red flags to some investors. To me, they look like wide-open buying windows.

What Fiverr, Netflix, and Roku have in common

Data source: YCharts.com on July 12, 2023. YTD = year to date.

What do these stocks have in common besides their dramatic price drops? Roku and Netflix work in tandem to define and dominate the global market for media-streaming services. However, Fiverr's platform for connecting freelancers with the people and companies needing their services doesn't fit that description.

That's alright because they share many important qualities in the current market. In my opinion, all three are significantly undervalued, given their massive long-term growth potential and expansive global markets. They're often misunderstood by bearish investors who, much like real bears, are too busy climbing the distracting trees of temporary business setbacks to realize they're standing in a veritable forest of long-term growth opportunities.

Looking beyond the bearish sentiments

For starters, Netflix has strategically pivoted from prioritizing subscriber growth at any cost toward a more sustainable, profit-oriented approach. Netflix announced this strategy shift 15 months ago, outlining a simple set of long-term ambitions: "Our goal is to sustain double-digit revenue growth, increase operating income even faster (as we expand margins) and generate growing positive free cash flow (FCF)."

The company is primed to see its earnings and cash flows rise significantly in the coming years by monetizing password-sharing customers and introducing ad-supported subscription plans at a reduced fee. That's precisely what shareholders want to see in the long run, and Netflix's stock price should eventually reflect the company's newfound focus on profitable growth.

On the other hand, Roku is grappling with the ripple effects of the digital ad market downturn, fueled by record inflation and stringent interest rates implemented by the Federal Reserve in 2022. Market makers are treating these macroeconomic headwinds as a permanent fixture of Roku's business environment, but the challenges are transitory. With the economy already showing signs of recovery, Roku is poised for considerable revenue growth as advertisers increase their spending.

Plus, let's not forget the future of advertising is digital, and Roku is a leader in this arena. Furthermore, the company has barely scratched the surface of international expansion. Sorry, I often get carried away with listing Roku's many advantages.

As for Fiverr, it continues to be labeled as a fleeting pandemic play, supposedly peaking during the lockdown era before the wide availability of COVID-19 vaccines. As the saying goes, the stock market is a voting machine in the short term but a weighing machine in the long term. As such, I expect Fiverr's share price to catch up with its growth trajectory in due time. These robust cash profits and continued revenue gains don't paint the picture of a company that peaked in 2020:

FVRR Revenue (TTM) data by YCharts. TTM = trailing 12 months.

So while these three stocks may be down now, I believe their long-term outlooks are brighter than many realize. Others may run scared, but I'll keep seizing the opportunity to add to my stakes in these promising companies. After all, fortune favors the bold.