Two Underrated Stocks to Consider Right Now

There are some excellent investment opportunities that many people are overlooking. Following the wise words of Warren Buffett, you should take a chance when others are afraid.

No one can predict how long the current bull market will last. Historically, these favorable market conditions last an average of about four years, but there are always exceptions. For example, the shortest bull market in the last century was only two months, while the longest stretched from 1987 until the dot-com bubble burst in 2000.

This latest bull run began following a wave of inflation worries in October 2022. Even someone like Warren Buffett is now selling off a portion of his Apple (AAPL) shares to ensure he has enough liquidity for when stock prices drop again. This cautious strategy shows that even great investors like Buffett are wary of the future, admitting they can't accurately predict market movements. In his 1986 letter to Berkshire Hathaway (BRK.A) (BRK.B) shareholders, he stated:

"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 occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Currently, the market seems to be filled with greed, which is why Buffett is pulling back and taking a defensive approach. Still, there are stocks that fit the criteria of being worthwhile investments to consider right now. As someone focused on growth, I enjoy discovering the next big companies long before they become mainstream or while others are doubting their potential.

Below are two of my top picks for stocks to buy today. These companies show great potential for growth, and the market isn't fully recognizing their worth just yet.

1. Roku

Roku (ROKU) recently announced its earnings report, which resulted in a significant drop in its stock price, despite the news being largely positive. Many investors reacted negatively to the company's cautious guidance and lower revenue per user.

This reaction seems misguided to me. Roku's shares were already undervalued, and following this drop, they now present an irresistible opportunity. The stock is currently priced at just 2.7 times its sales, even as Roku experiences solid revenue growth and operates in a vast market. The trend of digital streaming is increasingly becoming the norm, and Roku is expanding its influence beyond North America.

Notably, I'm not the only one who sees value in Roku right now. Well-known investment manager Cathie Wood has also been purchasing Roku shares, and the Sumitomo Group from Japan has taken a 5% stake in the company.

Even though Roku may not resonate with Buffett’s investment philosophy, I believe it has significant growth potential.

2. Fiverr

Fiverr International (FVRR) shares a similar story. Like Roku, Fiverr experienced a substantial rise in its stock price during the COVID-19 lockdowns of 2020 and 2021, only to suffer a sharp decline as people began returning to their usual routines. While the S&P 500 index is hitting new highs, Roku's stock is down 85% from its peak in 2021, and Fiverr's stock has dropped a staggering 91%.

This has been tough for investors.

However, the parallels between the two companies do not end there. Fiverr aims to disrupt a massive market thanks to its freelance service platform, which is designed to change how people collaborate globally. While growth slowed post-pandemic, it's now starting to accelerate again.

Fiverr's stock trades at a reasonable price of 2.8 times its sales, and analysts predict that its earnings could rise by 25% in 2024. If Roku isn't my choice in this market, then Fiverr is likely next in line.

I encourage you to consider these two promising companies with undervalued stocks. Your opinions may differ, but I find these to be my favorite stocks to purchase right now.

Note: Always do your own research before investing.

stocks, investment, growth