Sunday, 10 November 2024
by BD Banks
No one knows how long a bull market might last. On average, these investor-friendly markets tend to last about four years, but each era is different. The shortest bull market in the last century only lasted two months, while the longest one ran from 1987 to the dot-com bubble popping in 2000.
The current bull run started after the acute inflation panic in October 2022. Master investor Warren Buffett is selling a lot of Apple (NASDAQ: AAPL) stock to be prepared for the next downturn with milder market exposure and plenty of spare cash to invest in lower-priced stocks. But that move just reflects an abundance of caution, and even Buffett admits that he can’t pinpoint when the stock market might soar or sag:
Image source: Getty Images.
We have no idea — and never have had — whether the market is going to go up, down, or sideways in the near- or intermediate term future,” he wrote in his 1986 letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders. “What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
(Highlights added to emphasize Buffett’s point.)
There’s plenty of greed on the market today, so it stands to reason that Warren Buffett would take a defensive stance. Yet, there are still plenty of stocks available that meet Buffett’s “greedy when others are fearful” criteria. As a growth investor at heart, I love to find tomorrow’s business giants long before they’re widely known, or while Wall Street is expecting the worst from them.
On that note, here are my two favorite stocks to buy today. These promising growth stocks have tremendous long-term prospects, and the stock market isn’t giving them the credit they deserve — so far.
Media-streaming technology expert Roku (NASDAQ: ROKU) reported earnings last week. The stock dropped significantly despite robust results, as bearish investors focused on modest guidance and lower-average revenues per user.
I think that’s a big mistake. Roku’s shares were too cheap before that price drop, and now they look incredibly tempting. Shares are changing hands at just 2.7 times sales despite Roku’s accelerating top-line growth and the enormous size of its long-term target market. Digital-video streaming is becoming the standard way to consume visual media around the world, and this company has only begun to expand its North American dominance into other geographical markets.
Meanwhile, I’m not the only investor getting excited about the Roku opportunity right now. Famed growth investor Cathie Wood is buying Roku stock again, and the Sumitomi Group keiretsu from Japan has built a 5% stake in the company.
Roku may not be Buffett’s cup of tea, but I see great growth potential in this disruptive media stock.
Freelance services vendor Fiverr International (NYSE: FVRR) is a surprisingly similar story. Like Roku, Fiverr soared during the COVID-19 lockdowns of 2020 and 2021. The two stocks took dramatic price cuts when people got back back to their offices and social activities again. While the S&P 500 (SNPINDEX: ^GSPC) market index is soaring to all-time records right now, Roku’s stock is down 85% from the 2021 peak, and Fiverr investors have lost 91%.
Ouch.
But the similarities don’t end there. Fiverr is also disrupting a target market of epic scale, ultimately hoping to “change how the world works together.” The company’s sales growth slowed down after the pandemic surge, but the stalled-out revenue growth is gaining speed again.
And Fiverr’s stock trades at 2.8 times sales, while your average Wall Street analyst expects full-year earnings to jump 25% in 2024. If I’m not buying Roku stock in this market, I’m probably reaching for Fiverr’s “buy” button.
I highly recommend that you take a look at these two long-term growth stories with deeply undervalued stocks. Your mileage may vary, but these are my favorite stocks to buy right now.
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Anders Bylund has positions in Fiverr International and Roku. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Fiverr International, and Roku. The Motley Fool has a disclosure policy.