I have a long list of reasons to buy Roku (NASDAQ: ROKU) stock.
The media-streaming innovator’s international market expansion is in a very early stage. The company is growing sales, users, and cash profits at a remarkable pace. Rumor has it that Roku could be a buyout target in 2025. And the stock is staying down despite these pending catalysts, making it an incredible value.
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I could talk your ear off about any of these potentially stock-boosting catalysts and then some. But I haven’t even mentioned the biggest reason to buy Roku stock yet.
You see, the low stock price largely rests on soft ad sales on Roku’s media-streaming software platform. The weakness is part of a sector-wide downturn in the digital advertising sector, and this distressed industry is on the verge of a huge upswing.
You don’t want to be left empty-handed when this sea change plays out. It may not happen in 2025, but time is running out.
The path from Roku’s ad-based downturn to a roaring comeback is very simple:
The inflation crisis put a damper on targeted ad sales in 2022. Why spend big money on effective advertising when no one is ready to buy what you’re promoting?
Roku’s stock plunged despite strong user growth and a dominant market position. The adtech market’s slump gave Roku bears plenty of tools to hold the stock down — despite consistently strong earnings reports.
A post-inflation economy should see more consumer spending and give advertisers access to big budgets again. Roku’s large user base and effective ad-spot platform will benefit greatly from this ongoing market refresh.
This is a firm prediction, not a blind guess. Many companies in the online advertising industry are already reporting great revenue growth, signaling a strong recovery. Most of them are not as undervalued as Roku, though. That’s why I recommend Roku’s stock over other digital ad specialists.
Roku will soar in the next two years. You can quote me on that.
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Anders Bylund has positions in Roku. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.
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