The S&P 500 (^GSPC 1.02%) market index set a fresh all-time high this week, closing Friday's trading at 4,838. That's 35% above the market bottom in October 2022, which marked the end of the last bear market.
Thanks to the odd ways bull and bear market definitions work, it is now safe to say that this is a proper bull market; it wasn't official until right now but it arguably started 15 months ago.
Bullish market conditions have lasted an average of three years over each in the last century. The average stock market gain when the next bearish swing comes along stands at 114% over the same analysis period. Rising 35% in a year and change is an excellent start, but this bull run will probably have the legs for a much larger gain.
These market temperament categories are not hard and fast rules, of course. They're more like helpful rules of thumb that indicate statistical trends. History doesn't repeat itself, but it often rhymes. Therefore, I think Wall Street is likely to walk down this well-trodden pathway for a while, as historical patterns indicate.
As such, you should have plenty of time to cash in on the fresh bull market by investing in high-octane growth stocks on the rise. The market conditions are ripe for a prolonged price increase, especially since the Fed is getting a handle on the inflation crisis. Given these optimal market conditions, I highly recommend looking into Roku (ROKU -10.29%) and CrowdStrike Holdings (CRWD 2.03%). These hypergrowth tech stocks have fingers in all the right pies, and they look like no-brainer buys at this juncture.
CrowdStrike's double-edged AI sword
Building on this bullish market backdrop, CrowdStrike strikes me (pun intended!) as a safe bet on the twin opportunities of artificial intelligence (AI) and cybersecurity.
This company analyzes and mitigates security threats with the help of machine learning tools. CrowdStrike benefits from the development on new AI technologies, applying fresh insights to its security systems on the fly. At the same time, advances in AI research alsogives hackers more tools, increasing the need for stronger security shields. It's a win-win situation where CrowdStrike plays both sides of the evolving AI field's upsides and downsides.
This unique positioning in the ever-evolving AI landscape gives CrowdStrike a competitive edge. With its innovative AI applications, exemplified by the AI chatbot Charlotte in its Falcon system, CrowdStrike isn't just keeping pace with cybersecurity trends -- it's setting them and challenging others to keep up.
It shows in CrowdStrike's financial reports. Revenues and free cash flows are not only growing fast, but the growth is accelerating in recent quarters:
CRWD Revenue (TTM) data by YCharts
Of course, investors have embraced CrowdStrike's AI-driven growth. The stock rose 188% over the last 52 weeks, boosting its valuation to a lofty 24.5 times trailing sales. By contrast, the average price-to-sales ratio of the S&P 500 stands at 2.6 right now, and that's considered a historically rich multiple in the first place.
So CrowdStrike isn't a cheap stock but you get what you pay for -- a market-leading expert in the thriving cybersecurity market, using modern AI tools to keep hackers at bay. For investors looking to capitalize on the intersection of AI and cybersecurity, CrowdStrike presents a compelling opportunity right now. It's a pricey stock but it should be worth every penny as the company's growth prospects continue to expand.
Roku's hidden growth rockets
Many investors are quick to brush off Roku since the media-streaming platform expert isn't profitable at the moment. I mean, the company has eked out $102 million of free cash flows in the last four quarters, based on $3.4 billion in top-line revenues, but its bottom line added up to an $868 million net loss over the same period and keeps diving lower.
However, you should know that Roku essentially volunteered for these rock-bottom profits. When rivals and challengers to its dominant market position battled inflation with higher prices, Roku kept its price tags and royalty rates steady. It's an expensive tactic, but also an effective one. The company boasted 75.8 million active accounts in November's third-quarter update -- a 34% increase from 56.4 million accounts two years earlier. Quarterly sales rose from $680 million to $912 million over that span.
Global rival Samsung's (SSNL.F -28.74%) sales fell 18% lower in the same period. It's not an apples-to-apples comparison, given the Korean tech and electronics conglomerate's wide range of products and services, but Samsung's drooping revenue line serves as a stark contrast to Roku's tremendous growth.
Market makers largely left Roku bleeding in a Wall Street ditch two years ago, and despite a 73% price gain in the last 52 weeks, the stock still trades 82% below the all-time highs from the summer of 2021.
The global appetite for user-friendly streaming platforms should rise again as this bull market plays out. At the same time, the advertising market's lengthy downturn should swing back to impressive demand, allowing Roku to collect dramatically richer revenues in 2024 and beyond.
Remember, the company has moved on from its formerly heavy reliance on device sales to focus on more lucrative software licenses and ad sales instead. And the market has given Roku approximately zero credit for this game-changing strategy shift so far. I can't wait to see what the stock might do when the refreshed economy starts to pay dividends.
This exciting growth stock has no business trading at merely 3.7 times sales and 82% below its record highs. Yet, here we are. I think you'll be kicking yourself if you don't grab a few shares of this undervalued growth rocket before this bull market really takes off.
