My Top Two Picks for Current Stock Purchases
No one can predict how long a bull market will last. Historically, these markets have lasted around four years, but each era is unique. The shortest bull market in recent history lasted only two months, while the longest one spanned from 1987 to the dot-com bubble burst in 2000.
Currently, the bull run started following the severe inflation fear in October 2022. Renowned investor Warren Buffet is currently selling off a significant amount of Apple (AAPL 1.88%) stocks to prepare for the upcoming bear market with reduced market exposure and a substantial cash reserve for investing in low-priced stocks. This move merely reflects Buffet's precaution, and even he admitted that he can't predict the stock market's future trajectory.
As Buffet put it in his 1986 letter to Berkshire Hathaway shareholders, "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." What we do know, however, is that fear and greed will persistently affect the investment community, and it's their timing that remains unpredictable. Buffet's strategy, therefore, is to "be fearful when others are greedy and to be greedy only when others are fearful."
Greed prevails on the market today, which means Buffet is adopting a defensive approach. Nevertheless, there are still many stocks that fit Buffet's "be greedy when others are fearful" criteria. As a growth investor, I love discovering tomorrow's business titans before they gain widespread recognition or when the market has a bearish outlook on them.
Two of my current favorite stocks meet these criteria:
1. Roku
Roku, a media-streaming technology expert (ROKU 2.75%), reported lossless earnings recently. The stock experienced a significant drop despite robust results, causing investors to focus on conservative guidance and lower-than-average revenues per user.
In my opinion, investors made a mistake by underestimating Roku's stock value before the drop. Currently, the stock is selling at 2.7 times sales, which is considered a bargain given Roku's accelerating top-line growth and the massive opportunity in the global digital-video streaming market. Roku is steadily expanding its North American dominance into other international markets.
It's no surprise that other investors share my enthusiasm for Roku. Famed growth investor Cathie Wood and the Sumitomi Group from Japan have both built substantial stakes in the company.
Roku might not be Buffet's cup of tea, but its potential for growth excites me.
2. Fiverr
Fiverr International (FVRR 0.88%), a freelance services vendor, is undergoing a similar transformation. Like Roku, Fiverr saw significant price increases during the 2020 and 2021 lockdowns. The stock experienced a severe price drop when people started revisiting their offices and social activities.
Currently, the S&P 500 index is reaching unprecedented heights, while Roku's stock is down by 85% from its 2021 high and Fiverr shareholders have lost 91% of their investment.
However, the similarities don't end there. Fiverr, like Roku, is disrupting a market of incomprehensible scale and ultimately aims to revolutionize how the world collaborates. Fiverr's revenue growth may have slowed down since the pandemic's peak, but the sales growth is starting to pick up again.
Fiverr's stock is currently valued at 2.8 times sales, and analysts anticipate a 25% increase in earnings by 2024. If I'm not buying Roku stock in this market, I'm probably considering purchasing Fiverr shares.
In conclusion, I recommend taking a closer look at these two promising growth stocks with deeply undervalued shares. Your results might vary, but these are my top picks for today.
In light of Warren Buffet's cautious approach due to market greed, these circumstances present an opportunity for investors to consider undervalued stocks like Roku and Fiverr. With Roku's stock selling at a bargain 2.7 times sales, its potential for growth is exciting, despite not being a preferred choice for Buffet. Similarly, Fiverr's stock, currently trading at 2.8 times sales and projected to have a 25% earnings increase by 2024, is another promising investment option, even if it experienced a significant price drop recently. In the realm of finance and investing, these two stocks provide potential for future financial gains.
