The stock market is full of inexpensive stocks right now. The S&P 500 index has fallen 18% from its 52-week highs, and 377 of the index’s 505 tickers are doing even worse. Some of these suffering stocks should bounce back once the long-term damage from the coronavirus crisis has healed while others are cheap for good reason. Experts say that the market is likely to drop again as this earnings season reveals the deeper economic harm the COVID-19 event is causing, so even the winners and survivors should be available at lower buy-in prices fairly soon.
So let me tell you about the one stock I would actually buy right now. Streaming media facilitator Roku (NASDAQ:ROKU) is selling at a discount even though the company benefits from the virus-based lockdown orders. Roku’s stock should only move upwards from here.
What’s going on?
If you think of Roku as a maker of video-streaming set-top boxes, it’s high time to update that view. The company still sells these hardware boxes but that’s not Roku’s core business anymore. It’s all about software and services, budged along by those set-top boxes being sold at a breakeven gross margin in order to expand the company’s user base and top-line revenues.
Users can also enter the company’s ecosystem through the growing network of TV set partners, who pay modest fees for the right to use Roku’s proven operating system and apps for media streaming.
Either way, each new user gives Roku a wider reach for its advertising services. Americans are buying fewer streaming devices in the lockdown era, but they make up for that by spending a lot more time enjoying digital content on their existing hardware.