The next bull market is coming: 2 stocks up 68% down and 74% to buy now

It has been a difficult year for investors. The heavy technician Nasdaq composite it is currently 24% below its peak, putting the index in bear market territory, and many individual stocks have fallen further. For instance, Roku (ROKU 0.45%) And Shopify (SHOP 0.86%) they are down by 68% and 74% respectively.

However, investors can take comfort in one indisputable fact: the Nasdaq Composite has recovered from every bear market in the past, regardless of duration or severity. This means that another bull market is almost certainly on the way, and Roku and Shopify are set to bounce back when this turnaround takes place.

That’s why both titles are worth buying today.

Roku: the best streaming platform

Roku is the most popular streaming platform in the United States, Canada and Mexico, measured by watch hours. In fact, it dominates those markets to such an extent that it powers nearly 31% of global TV streaming time in Q2 2022, according to Conviva. The next closest competitor was Amazon Fire TV with 16% market share.

Roku monetizes its platform through digital advertising and digital payments. Specifically, it sells advertising inventory from its ad-supported streaming service (The Roku Channel) and charges a fee to brands using its ad-buying platform (OneView). Additionally, Roku takes a cut in payouts when viewers purchase subscription content on its platform. To that end, the company is well positioned to grow as the centuries-old shift to streaming continues.

That said, Roku has been struggling with inflation over the past year. Consumers have pulled out of discretionary purchases and advertisers have revised their budgets downward to compensate for weakness in consumer spending. To that end, Roku posted a revenue increase of only 18% to $ 764 million in the second quarter and posted a GAAP loss of $ 0.82 per diluted share.

As a shareholder, I will be the first to admit that the results are disappointing. But inflationary headwinds are a temporary problem. Investors need to focus on the long-term opportunity. According to eMarketer, CTV ad spend in the United States is expected to grow 22% annually to reach $ 39 billion by 2026, and total TV ad spend will exceed $ 100 billion by 2026. This second figure is perhaps more important, as Roku believes all TV commercials will eventually be streamed.

At the same time, the company is slowly expanding its advertising business to other geographies, including Canada in 2021 and Mexico in 2022. Given its position as the leading streaming platform in these three markets, Roku is set to grow to wildfire in the coming years. Additionally, its addressable market will continue to expand as Roku takes its advertising business to new geographies in the future.

Currently, the shares are trading at an affordable price of 3.2 times sales, which is a bargain compared to the three-year average of 14.9 times sales. That’s why this growth stock is a buy.

Shopify – the best ecommerce software platform

Shopify helps merchants build and grow their brand across multiple sales channels. Its software integrates with online marketplaces such as Amazon and Etsyand social media networks like TikTok, but it also allows merchants to create direct-to-consumer (D2C) websites. That distinguishing quality is very important, as D2C business models allow brands to directly engage buyers and build lasting relationships.

That said, Shopify really shines because it can support merchants in all aspects of commerce, both physical and digital. It offers value-added services such as payment processing and financing, as well as thousands of integrations through the Shopify App Store. This includes payroll and team management applications. Better yet, Shopify is building a fulfillment network that will allow for two-day delivery to the United States, thereby simplifying logistics for merchants and improving the experience for shoppers.

Overall, powerful software and a solid suite of value-added services set Shopify apart from its peers. In fact, it ranks as the leading ecommerce software provider based on market presence and user satisfaction and last year fueled 10.3% of US ecommerce sales, second only to Amazon.

Of course, Shopify has struggled with high inflation in recent times. Revenue increased only 16% to $ 1.3 billion in the second quarter and the company reported a non-GAAP loss of $ 0.03 per diluted share. Even so, Shopify continued to gain market share in US commerce during the first half of the year, both online and offline, and investors have good reason to believe the stock will pick up as the macroeconomic situation improves.

In this regard, a particularly interesting growth opportunity is business-to-business (B2B) e-commerce. Shopify recently launched new B2B commerce tools for Shopify Plus, a customizable platform built for larger businesses. These tools allow Plus merchants to sell D2C and B2B from the same online store, strengthening Shopify’s appeal and greatly expanding its market opportunities.

For context, retail (business-to-consumer) ecommerce sales are projected to increase 10% annually to reach $ 7.4 trillion by 2025, according to eMarketer. But B2B ecommerce sales are expected to grow 20% annually to exceed $ 33 trillion by 2030, according to Grand View Research.

Currently, the shares are trading at a cheap price of 8.8 times sales, a bargain compared to the three-year average of 37.8 times sales. That’s why this growth title is a scream buy.

John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. Trevor Jennewine has positions in Amazon, Etsy, Roku, and Shopify. The Motley Fool has locations and recommends Amazon, Etsy, Roku, and Shopify. The Motley Fool recommends the following options: long January 2023 $ 1,140 calls on Shopify and short January 2023 $ 1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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