Roku: Secular Growth Stock At A Reasonable Price

Jan. 23, 2025 9:15 AM ETRoku, Inc. (ROKU) Stock2 Comments
(8min)

Summary

  • Despite seeing its business going from strength to strength, Roku's stock has underperformed significantly over the past year.
  • In this note, we shall analyze Roku's business trends and re-evaluate the stock to gauge its long-term risk/reward.
  • Roku's partnerships and ad demand growth position it for improved monetization and free cash flow generation, with a long-term secular growth trend in linear to connected TV ad spending.
  • With its fair value sitting at ~$151 per share, Roku is a "Strong Buy" at current levels, with its 5-year expected CAGR of 29%.
  • Looking for more investing ideas like this one? Get them exclusively at The Quantamental Investor. Learn More »

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Introduction

About a year ago, I reiterated my bullish stance on streaming TV OS giant Roku, Inc. (NASDAQ:ROKU), citing improving business fundamentals, a healthy advertising market outlook, and an attractive stock valuation:

Since then, Roku has delivered a string

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This article was written by

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I am Ahan Vashi, a seasoned investor with professional background in equity research, private equity, and software engineering. I currently serve as the Chief Financial Engineer at The Quantamental Investor, a community pursuing financial freedom through bold, active investing with proactive risk management.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of ROKU either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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