Core Insights - The article emphasizes that valuations in stocks, real estate, or any cash-generating business are fundamentally based on future growth expectations, urging investors to rely on data rather than opinions [1] Group 1: Valuation Misconceptions - Many retail investors mistakenly label stocks as "expensive" solely based on high price-to-earnings (P/E) ratios without considering growth trajectories [2] - A proper valuation requires weighing price against growth potential, which is the focus of the analysis [2] Group 2: Company-Specific Analyses Roku Inc. - Roku's recent quarterly earnings showed a significant EPS of $0.07, contrasting with a consensus forecast of a 16-cent net loss, indicating the company's ability to drive growth despite cautious consumer spending [3][4] - Analysts have set a price target of $145 for Roku, reflecting its potential for higher earnings as its platform scales and ad revenues strengthen, suggesting a 40% upside from the current price of $99.81 [5][6] Spotify Technology - Spotify is viewed favorably by institutional investors due to its stable subscription revenue model, despite a forward P/E of 66.2x [9][10] - Analysts have initiated coverage with a price target of $845, indicating a 24% upside potential from the current price of $674.91 [11] On Holding - On Holding has successfully transitioned from a retail-focused model to one with significant wholesale exposure, expected to enhance gross margins and boost EPS [12][13] - The current price target for On Holding is $64.20, suggesting a 52.5% upside from its current price of $43.15, as analysts anticipate further growth from its wholesale model [14]

Core Insights - The comparison between Fox Corporation (FOX) and Roku (ROKU) indicates that FOX presents a better value opportunity for investors at this time [1] Valuation Metrics - FOX has a Zacks Rank of 2 (Buy), while ROKU has a Zacks Rank of 3 (Hold), suggesting that FOX has a more favorable earnings estimate revision trend [3] - FOX's forward P/E ratio is 13.69, significantly lower than ROKU's forward P/E of 896.07, indicating that FOX is more attractively priced [5] - FOX has a PEG ratio of 1.35 compared to ROKU's PEG ratio of 14.68, further supporting FOX's valuation advantage [5] - FOX's P/B ratio is 2.04, while ROKU's P/B ratio is 5.96, highlighting FOX's superior market value relative to its book value [6] - Based on these metrics, FOX holds a Value grade of A, whereas ROKU has a Value grade of D, reinforcing the conclusion that FOX is the superior investment option [6][7]

Core Insights - The third quarter performance of the selected stocks was strong, with 14 out of 18 stocks finishing in positive territory, and 12 of those achieving double-digit gains [2][3] - Notably, four stocks have doubled in value year-to-date, while 13 stocks have recorded double-digit gains [2] - The report provides a ranking of the 18 stocks based on their year-to-date returns and offers insights into their outlook for the fourth quarter [2] Stock Performance Summary - **Beam Therapeutics (BEAM)**: Q3 gain of 42.68%, YTD return of 4.03% [3] - **Bloom Energy (BE)**: Exceptional Q3 gain of 253.55%, YTD return of 309.14% [3] - **Boeing (BA)**: Q3 gain of 3.01%, YTD return of 23.12% [3] - **Carvana (CVNA)**: Q3 gain of 11.95%, YTD return of 90.70% [3] - **CF Industries (CF)**: Q3 loss of 2.50%, YTD return of 6.03% [3] - **Coinbase Global (COIN)**: Q3 loss of 3.71%, YTD return of 50.98% [3] - **Dell Technologies (DELL)**: Q3 gain of 15.64%, YTD return of 26.09% [3] - **Deutsche Bank (DB)**: Q3 gain of 20.94%, YTD return of 108.91% [3] - **Ezcorp (EZPW)**: Q3 gain of 37.18%, YTD return of 49.39% [3] - **LendingClub (LC)**: Q3 gain of 26.27%, YTD return of -6.38% [3] - **Nebius Group (NBIS)**: Q3 gain of 102.91%, YTD return of 356.10% [3] - **Opera (OPRA)**: Q3 gain of 9.21%, YTD return of -2.85% [3] - **Rocket Lab (RKLB)**: Q3 gain of 33.94%, YTD return of 108.99% [3] - **Roku (ROKU)**: Q3 gain of 13.93%, YTD return of 39.22% [3] - **Sea (SE)**: Q3 gain of 11.75%, YTD return of 73.99% [3] - **SEI Investments (SEIC)**: Q3 loss of 5.58%, YTD return of 3.18% [3] - **SoFi Technologies (SOFI)**: Q3 gain of 45.09%, YTD return of 65.62% [3] - **STMicroelectronics NV (STM)**: Q3 loss of 7.07%, YTD return of 16.54% [3] - **Total Gain**: Cumulative YTD return of 1322.80% across all stocks [3] Notable Stock Insights - **Nebius Group NV (NBIS)**: Strong performance in the AI sector, with 10% of the stock's float sold short [3] - **Bloom Energy Inc (BE)**: Benefiting from the data center boom, with a significant Q3 gain [4] - **Rocket Lab Corp (RKLB)**: Showing bullish potential despite a recent stock sale [5] - **Deutsche Bank AG (DB)**: A solid performer in the banking sector, demonstrating value investing characteristics [5] - **Carvana Co (CVNA)**: Positive momentum following earnings, with decreasing short interest [6] - **Sea Limited (SE)**: Consistent performance with three consecutive profitable quarters [6] - **SoFi Technologies (SOFI)**: Testing support levels, with potential for further gains [7] - **Coinbase Global Inc (COIN)**: Continues to face skepticism from analysts despite its crypto focus [8] - **Ezcorp Inc (EZPW)**: Positive bounce off its 200-day moving average, indicating potential growth [8] - **Roku Inc (ROKU)**: Reinventing itself after being oversold [9] - **Dell Technologies Inc (DELL)**: Monitoring external factors like chip imports and tariffs [9] - **Boeing Co (BA)**: Currently in a channel of higher highs, indicating potential for recovery [9] - **STMicroelectronics NV (STM)**: Struggling to recover from a post-earnings gap [10] - **CF Industries (CF)**: Upcoming earnings report to be closely watched [10] - **Beam Therapeutics Inc (BEAM)**: Trading at its highest level since March, showing signs of recovery [10] - **SEI Investments Co (SEIC)**: Facing downward pressure, testing its 200-day moving average [10] - **Opera Ltd (OPRA)**: Struggling to capitalize on previous positive ratings [11] - **LendingClub Corp (LC)**: Despite being the worst performer, still showing resilience with a recent quarterly gain [11] Market Sentiment - Several stocks, including BEAM, COIN, DELL, NBIS, ROKU, and STM, have high Relative Strength Indexes, indicating potential overbought conditions [12] - Despite the strong performance, there are still bullish cases to be made for all 18 stocks listed [12]

Core Viewpoint - Roku shares have experienced a continuous upward trend, closing 1% higher at $105 after seven consecutive sessions of gains, indicating strong market performance and investor confidence in the streaming platform [1] Summary by Relevant Sections Stock Performance - Roku's stock gained over 4% in the preceding six sessions, showcasing a robust recovery and positive momentum in the market [1] - The stock has increased nearly 36% year-to-date, reflecting significant growth compared to previous periods [1]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Roku (ROKU), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][5]. Brokerage Recommendations for Roku - Roku has an average brokerage recommendation (ABR) of 1.84, indicating a consensus between Strong Buy and Buy, based on recommendations from 30 brokerage firms [2]. - Out of the 30 recommendations, 17 are classified as Strong Buy and 2 as Buy, representing 56.7% and 6.7% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - The article highlights that relying solely on brokerage recommendations may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [5]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [6][10]. Comparison with Zacks Rank - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions rather than brokerage recommendations [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations, the Zacks Rank utilizes a quantitative model that reflects earnings estimate revisions, providing a more timely and balanced assessment of stock performance [9][12]. Current Earnings Estimates for Roku - The Zacks Consensus Estimate for Roku's current year earnings remains unchanged at $0.12, indicating steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, Roku holds a Zacks Rank of 3 (Hold), suggesting caution despite the Buy-equivalent ABR [14].

Core Viewpoint - The article highlights two undervalued growth stocks, Carnival and Roku, which are positioned for attractive returns as they trade significantly below their previous peaks while experiencing growing demand for their services. Group 1: Carnival - Carnival stock has risen 62% over the last year but remains 60% below its all-time high before the pandemic [2] - The company is a global leader in the cruise industry, with brands including Costa Cruises, Aida, and Princess Cruises, benefiting from strong demand that is driving ticket prices and record revenues [3] - Carnival generated $4.3 billion in operating profit on $26 billion of revenue over the last year, with a recent quarterly record in revenue and profitability, yet trades at just 14 times this year's consensus earnings estimate [4] - The company has reported its 10th consecutive quarter of record revenue and is investing in exclusive destinations to drive further demand, such as Celebration Key and Half Moon Cay [5][6] - Analysts expect Carnival's earnings to grow at an annualized rate of 21%, with nearly half of 2026 sailings already booked, indicating strong demand visibility [6] Group 2: Roku - Roku is well positioned to capture advertising spending shifting from traditional TV to digital streaming, with over 150 million viewers starting their daily TV watching through its platform [7] - The connected TV market is transforming, with nearly 44% of total TV watching time in the U.S. occurring on streaming platforms, and ad spending in this market expected to grow from $33 billion this year to $47 billion by 2028 [8] - Roku's platform revenue, which includes ads and subscription revenue sharing, grew 18% year over year last quarter, indicating a positive trend in ad spending [9] - The company competes in a competitive connected TV market but offers a budget-friendly alternative and free ad-supported content through The Roku Channel [10] - Roku's stock is up 34% year to date, with analysts expecting free cash flow to grow at an annualized rate of 42% to reach $1.2 billion by 2029, suggesting potential for market-beating returns [11][12]

Core Insights - Roku's stock has shown strong performance in October, trading above $100 for three consecutive days, although this has been a temporary experience in previous years [2][3] - The company has faced significant stock price declines since reaching an all-time high of $490 in early 2021, but it is now revisiting the triple-digit trading range for the fourth consecutive year [3][4] - There is optimism that Roku may maintain its current stock price momentum, with analysts predicting substantial bottom-line improvements in the latter half of the year [4][6] Financial Performance - Roku has demonstrated consistent revenue growth in the double digits for over two years and has generated significant free cash flow [6] - The company recently reported its first quarterly profit in over three years, which has shifted the narrative from negative earnings to positive growth potential [5][6] - Despite beating expectations and raising guidance, Roku's stock has historically declined the day after financial results are announced [5] Market Position - Roku operates in a highly competitive streaming market, facing challenges from larger companies with more financial resources [7] - The company has stopped publishing its active user count and average revenue per user, but it continues to report usage metrics, with streaming hours on the platform increasing by 17% over the past year [7][8] - The anticipated return to profitability is expected to address some of the bearish sentiments surrounding the company [8]

Core Viewpoint - Roku's stock has shown significant growth, gaining 33.6% over the past 52 weeks and trading 90.4% above its annual low, indicating a strong recovery and positive market sentiment towards the company [1]. Financial Performance - Roku has consistently exceeded Wall Street's quarterly revenue estimates for the last 12 reports, achieving a seven-quarter streak of positive earnings surprises [3][7]. - The company's adjusted earnings turned positive in Q2 2025, contrary to analyst expectations of a loss, marking a significant turnaround in profitability [3][7]. Market Position and Growth Prospects - Analysts project double-digit sales growth for Roku in 2025 and 2026, with even the most conservative estimates indicating positive earnings in the upcoming quarter [4][5]. - Roku's strategy of maintaining stable prices during inflation has allowed it to build market share, which is expected to enhance profitability and drive strong sales growth in the future [5][7].

Core Insights - Zacks Premium provides various tools to enhance stock market investment confidence and knowledge [1] - The Zacks Style Scores serve as complementary indicators to the Zacks Rank, helping investors select stocks with high potential for market outperformance [3][8] Zacks Style Scores - The Zacks Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each rated from A to F based on specific investment characteristics [4][5][6][7] - Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [4] - Growth Score emphasizes a company's financial health and future growth potential based on earnings and sales projections [5] - Momentum Score assesses stocks based on price trends and earnings estimate changes, indicating optimal times for investment [6] - VGM Score combines all three styles to highlight stocks with the best value, growth, and momentum characteristics [7] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors in stock selection [8] - Stocks rated 1 (Strong Buy) have historically achieved an average annual return of +23.64% since 1988, significantly outperforming the S&P 500 [9] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal investment success [10] Stock Example: Roku - Roku is identified as a leading TV streaming platform in North America, currently holding a Zacks Rank of 3 (Hold) with a VGM Score of B [12] - The stock has a Momentum Style Score of B, with a recent price increase of 3.2% over the past four weeks [12] - Analysts have revised Roku's earnings estimate upwards, with the Zacks Consensus Estimate increasing by $0.29 to $0.12 per share, and the company has an average earnings surprise of +75.4% [13]

Core Insights - Roku's strategic shift towards advertising innovation is expected to enhance its position in the connected television market, with platform revenues increasing by 18% year-over-year to $975 million in Q2 2025 [1][8]. Advertising Strategy - The Roku Ads Manager aims to capture performance advertising budgets traditionally held by social media and search platforms, enabling small and medium-sized businesses to create professional video ads quickly [2]. - Features like Shopify integration and shoppable overlays are anticipated to attract direct-to-consumer advertisers, allowing Roku to benefit from the migration of ad spend from conventional digital channels [2]. Demand-Side Platform Integrations - Enhanced partnerships with major Demand-Side Platforms (DSPs) such as Amazon and The Trade Desk are expected to improve bid density and fill rates for Roku's advertising inventory [3]. - Roku's authenticated user base of over 90 million households will facilitate precise targeting and flexible pricing for advertisers, while the Roku Channel's 80% growth in viewing hours will support increased advertising scale [3]. Revenue Estimates - The Zacks Consensus Estimate for Roku's Q3 2025 platform revenues is projected at $1.04 billion, reflecting a 16% year-over-year growth, driven by advertising innovations and increased engagement [4]. Competitive Landscape - Roku faces significant competition from Disney and Netflix, both of which are enhancing their advertising strategies to capture connected TV budgets [5]. - Disney is expected to leverage its Hulu and Disney+ ad tiers, while Netflix is rapidly expanding its ad-supported offerings, increasing competition in the market [5]. Stock Performance and Valuation - Roku's shares have increased by 32.1% year-to-date, slightly trailing the Zacks Broadcast Radio and Television industry's growth of 32.7% [6]. - The stock is currently trading at a forward 12-month Price/Sales ratio of 2.87X, compared to the industry's 5.01X, indicating a relatively lower valuation [10]. Earnings Estimates - The Zacks Consensus Estimate for Roku's Q3 2025 earnings is set at 7 cents per share, a notable improvement from a loss of 6 cents per share in the same quarter last year [13].