1 Growth Stock Down 28% to Buy Right Now

Roku (ROKU), a leading streaming platform, has seen its stock price drop by 28% year-to-date. Despite this significant decline, the company's fundamentals remain strong, making it an attractive investment opportunity for patient shareholders. This article will delve into Roku's recent performance, its strategic focus on advertising and subscription growth, and the potential catalysts that could drive its stock recovery in the fourth quarter.

Roku's robust business growth is evident in its revenue and profit margins. The company has reported a 43% year-over-year increase in Platform revenue in its Q4 2024 report, highlighting the success of its ad-focused strategy. Additionally, Roku's increasing subscriptions, including Roku Channel subscriptions, have contributed to its overall growth and stock price performance. Despite market fluctuations, Roku's long-term growth prospects remain strong, making it an attractive investment opportunity despite its recent 28% decline.

Roku's strategic partnerships and collaborations have significantly impacted its stock price and business prospects. The company's alliance with The Trade Desk, a leading global advertising technology company, has expanded Roku's ad-buying capabilities, driving growth in its Platforms division (Advertising). This partnership has enabled Roku to attract more ad buyers, increasing its ad sales and revenue. In Q4 2024, Roku's ad sales are expected to report strong results, contributing to the company's overall growth. Despite a 28% year-to-date drop in stock price, Roku's long-term prospects remain robust, driven by strategic collaborations and a thriving business model.



Roku's financial metrics show a promising trajectory despite its recent stock price decline. Revenue growth has been robust, with a 3-year CAGR of 25.8% (YCharts). Net margins, though negative historically, have been improving and are expected to turn positive in Q4 2024. Free cash flow, which turned positive in 2021, supports Roku's growth prospects. The stock's 28% decline may present an attractive entry point, given strong business fundamentals, a growing ad market, and long-term growth potential.

Roku (ROKU) stock is down 28% year-to-date but offers compelling catalysts for a fourth-quarter recovery. The company's strong sales growth, improving profit margins, and robust cash flow indicate business health. Key catalysts include generous political ad spending in November, a fresh ad-buying partnership with The Trade Desk (TTD), and a marketing push for Roku's products. As the U.S. economy stabilizes and consumers spend more, Roku's smart-TV sales and advertising opportunities could surge. Additionally, Roku's expansion into advertising and subscription services, as outlined by CEO Anthony Wood, positions the company for long-term growth. With a forward P/E ratio of 16.7, Roku offers a solid entry point for investors seeking growth stocks at a discount.



In conclusion, Roku's strong fundamentals, strategic positioning, and potential catalysts make it an attractive investment opportunity despite its recent stock price decline. Investors should consider Roku as a compelling long-term growth prospect, particularly given its undervalued stock price and robust business model.