The stock market has had a strong start to 2024, but different companies have reflected that rebound in varying degrees in terms of share price changes.

Now, it's important to remember that share price alone doesn't tell you a lot about a business, other than what investors seem to value it at a given point of time. A stock may be down because the business is doing badly, but there may be more to the story, too. Likewise, a business that has seen share prices run up doesn't automatically equal a great buy.

You need to see why the stock is moving the way it is, whether the business has a long-term competitive advantage, what its financials look like, and assess its overall growth story. In addition, you want to invest in businesses that you like, understand, and make sense for the composition of your portfolio and the overall goals that you've set for yourself.

On that note, let's take a look at two stocks that the market has heavily discounted recently, but which may pose solid buying propositions for shrewd long-term investors.

1. Fiverr

Fiverr (FVRR 1.49%) is trading down by around 40% from its place one year ago. Investors seem to be displeased with the growth rates the company is reporting, particularly relevant to its pandemic-level growth figures, but there's much more beneath the surface to uncover.

While it's true that Fiverr isn't growing at the pace it was during the pandemic, when interest in buying and selling gig services exploded relative to past periods, expecting that rate of growth to continue indefinitely wouldn't necessarily have been realistic.

At the same time, the gig economy is still an increasingly important aspect of the global labor economy, and it is expanding at a rapid clip. Some estimates show that the global gig economy could hit a valuation of around $873 billion by the year 2027.

Fiverr is also continuing to steadily grow revenue, and has recently turned profitable on the basis of generally accepted accounting principles (GAAP). Core drivers of this revenue growth and profitability have included the expansion of its take rate of transactions, innovations in the wake of the artificial intelligence (AI) boom, and the growing adoption of programs like Promoted Gigs, where freelancers can pay to boost the visibility of their services.

In 2023, Fiverr reported revenue of $361 million, up 7% from the prior year. Bear in mind that the company reported revenue of about $190 million in 2020, so that's a 90% increase on a three-year basis. Fiverr's net income for 2023 came in at $3.7 million, compared to a net loss of $72 million in 2022.

At the end of 2023, Fiverr had 4.1 million active buyers on the platform, which was down by 5% on a year-over-year basis. However, spending per buyer at the end of the year totaled $278, a nice 6% bump from the same period in 2022. Fiverr also increased its take rate by 160 basis points as of the end of 2023, closing out the year with a take rate of 31.8%. The company's AI investments drove gross merchandise value (GMV) on the platform up 4% in 2023.

Fiverr has rolled out a range of new AI-centric services that include everything from skilled freelancers, who will create custom apps and chatbots for clients, to AI matching tools that help buyers connect with freelancers. Management also noted that complex services accounted for 32% of GMV last year, up 29% from 2022.

This is not the story of a business in its waning years. The company's AI investments, rising take rate, and improving profitability all bode well for the future. Now could be a good time to buy the stock on the dip, which is currently trading at a price-to-sales (P/S) multiple of around 2.3.

2. Chewy

Chewy (CHWY -0.44%) has seen shares fall by around 60% over the trailing 12 months. Much of this seems to go back to the fact that investors are worried about the pet care industry on the whole, and what pet spending will look like in a global economy that is still struggling.

It's true that pet ownership and pet spending skyrocketed during the pandemic, but that doesn't mean this industry has gone anywhere since then. While spending has moderated and the cadence of individuals buying new pets has slowed from pandemic levels, most people see expenditures for their furry friends as an essential aspect of household spending.

This lends a level of resilience to companies with exposure to this space, despite ongoing macro challenges. That certainly bears up in Chewy's overall financial performance. Also, despite what Chewy's share price might indicate, its financials are in solid shape, and the company is currently profitable even though its cohort of active customers have declined slightly.

Most of Chewy's revenue comes from recurring revenue thanks to its Autoship program. In 2023, Autoship sales accounted for 76% of Chewy's total net sales. So not only are one-time sales a relatively small portion of Chewy's revenue, but this would indicate that once a customer uses its platform, they tend to stay with it. Net sales per active customer in 2023 totaled $555, a 12% increase from 2022.

Last year, 85% of Chewy's net sales came from non-discretionary sources of pet spending, namely consumables and healthcare. Total net sales for the year came in at $11 billion, up 10% year over year. While net income was down from one year ago, the company still reported a GAAP profit of about $40 million, while adjusted net income totaled $296 million.

Chewy is also proving to be a free cash flow machine. The company nearly tripled its free cash flow in 2023 compared to the prior year, with last year's figure eclipsing $340 million. The shares currently trade at a P/S ratio of less than 1. If you're looking for a quality business to buy on the dip, you may want to take a second look at this top pet stock.