Nasdaq Bear Market: 2 Stellar Growth Stocks to Buy

Recession fears weighed heavily on the stock market during the first half of the year. In fact, the wide S&P500 had its worst first half since 1970, and the Nasdaq Compound is currently 25% off its peak, putting the tech-heavy index in bearish territory.

On the bright side, falling prices mean that many stocks are now trading at prices below their historical valuations, creating an opportunity for patient investors. Here are two growth stocks worth buying right now.

1st year

Year (YEAR -8.91%) helped pioneer the streaming industry. In 2008, it brought the first streaming player to market, shortly after netflix introduces the first streaming service. Today, RokuOS is still the only operating system designed specifically for TV, and its reputation for user-friendliness has led to partnerships with a growing number of TV manufacturers. This has helped Roku position itself as the most popular streaming platform in the United States, Canada, and Mexico.

Meanwhile, Roku has also built a powerful ad technology platform, OneView, which allows advertisers to deliver targeted campaigns to connected television (CTV), mobile devices and desktop computers. This means that Roku can monetize advertising whether or not it owns the inventory.

In Q1, Roku reported a 14% increase in streaming hours, marking a deceleration in engagement. But that came on the heels of a pandemic-driven ramp-up the year before, when viewing time soared 49%. More importantly, Roku has consistently exceeded the industry average growth of 10%, which means it has gained market share. This led to reasonably strong financial results, with revenue growing 44% to $2.9 billion and operating cash flowing 18% to $234 million.

Looking to the future, investors have good reason to be optimistic. US viewers currently spend 46% of their TV time on streaming, yet advertisers only spend 18% of their TV budget on streaming. In the coming years, investors should expect more advertising dollars to flow to streaming platforms, and Roku is well positioned to benefit from this trend.

On that note, global TV ad spending will hit $344 billion by 2026, according to the IMARC group, and Roku CEO Anthony Wood believes all TV ads will eventually be streamed. This creates a tremendous opportunity for the company.

The shares are currently trading at 4.7 times sales, much cheaper than the three-year average of 15.5 times sales. That’s why this growth stock is a crying buy.

2. Block

To block (SQ -3.96%) divides its business into two segments: Square and Cash App. Through the Square ecosystem, sellers can provide all the hardware, software, and services they need to run a business across online and offline locations. This differentiates Block from traditional merchant acquirers (e.g. banks), which often bundle products from different vendors, leaving merchants with a patchwork of solutions that must be manually integrated.

The Cash App ecosystem takes an equally disruptive approach. Consumers can deposit, send, spend and invest money from a single mobile app, and they can file their taxes for free. Even better, where banks with physical branches typically pay at least $300 to acquire a new customer, Block only pays $10 to acquire a new Cash App user, making its business model much more efficient.

In short, Block is disrupting the financial services industry for merchants and consumers, and that has translated into strong financial results. In the past year, gross profit soared 50% to $4.8 billion and the company generated $965 million in free cash flow, compared to a loss of $344 million the previous year. .

Looking ahead, Block is well positioned to grow its business. The company is working to unlock the synergies between Square and Cash App by integrating Afterpay — its recently acquired buy now, pay later (BNPL) platform — into both ecosystems.

Specifically, Square sellers will be able to accept BNPL both online and in person. This should boost sales growth, simply because BNPL tends to increase trading volume. But these sellers will also be able to use shopper data to provide targeted recommendations to consumers through the Cash app, which could further increase sales.

Currently, Block values ​​its addressable market in the United States at $190 billion in gross profit, but the company also operates in Canada, Japan, Australia and the United Kingdom, and it recently entered Ireland, Spain and in France. That means Block has a long growth streak, and with shares trading at 2.3 times sell – near the cheapest valuation in five years – it’s a great time to buy this growth stock.