HomeBusiness2 top stocks are down 72% and 74% to buy now

2 top stocks are down 72% and 74% to buy now

The market has bull and bear cycles, and each cycle presents opportunities for investors. Bull markets are the growth part of the cycle and are much more common than bear markets.

One thing that isn’t characteristic of bull markets is the ability to buy top stocks during a dip; investors should carefully look for bargains in the bull market. Rotate group (NYSE: RVLV) And Roblox (NYSE: RBLX) are two top stocks to buy today during the dip. This is why.

The future of fashion includes AI

Jennifer Saibil: Revolve has two sister sites, Revolve and the haute couture site FWRD, where it offers premium fashion designs for the Millennial and Gen Z markets. Completely digital, Revolve has always used artificial intelligence (AI) in all its operations, and its rich trove of data gives it enormous power to offer goods it knows its customers want, at full price to ask.

Revolve’s core customers are usually willing to spend a lot of money on high fashion, but they are not necessarily wealthy and are now cutting back. Revenue fell 1% year-over-year in the fourth quarter of 2023 and 3% for the full year. Net profit fell 53% for the quarter and 52% for the year.

As depressing as that is, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and even net profit remained positive.

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In the meantime, Revolve is showing resilience. Sales have fallen slightly, but inventory has fallen even further, 5% compared to the previous year. This contributed to the first increase in gross margin in six quarters in the fourth quarter. The company is focused on cash efficiency and free cash flow increased 114% year over year to $39 million in 2023.

Revolve is doing what it does best: building relationships with its loyal customers to generate engagement, and it’s still adding customers. The number of active customers increased 9% year-over-year in the fourth quarter, and total orders placed increased 3%. The average order value decreased by 1% compared to last year, which explains the decline in sales, as loyal customers remain with Revolve, but switch to cheaper items under pressure.

The stock is down 72% from its 2021 highs. It rose quickly as revenue growth soared and was expected to fall when high inflation hit, but it is coming through this tough time well and should benefit patient investors who buying today should reward you.

Roblox stock is poised for a major comeback

Keith Noonan: Roblox was one of the first big movers in the metaverse space and remains a clear leader in the category. The company’s platform is home to thousands of unique games and social experiences. Users can also create their own content on the platform.

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By spending real money to unlock currency in the world, creators can build their own games and experiences for other users to enjoy. If this content generates significant engagement from other users, the creators can actually make significant amounts of cash.

For example, Roblox paid $221.8 million to creators on its platform in the fourth quarter of 2023 – a 22% increase year over year. The incentive structure means that new content is constantly being added to the platform and popular games and experiences receive regular significant content updates to keep users engaged.

Combined with the platform’s heavy online socialization component, this means there’s almost always something new to do and see on Roblox.

In the fourth quarter, Roblox managed to grow its bookings 25% year over year to approximately $1.13 billion. A portion of total bookings goes towards paying creators on the platform, so revenue for the period was approximately $749.9 million – good for 30% year-over-year growth. Meanwhile, net operating income rose 20% year over year to $143.3 million.

The strong growth in the fourth quarter was made possible by the continued expansion of the platform’s user base and an increase in the average amount of spend and bookings generated per user. Roblox’s average daily active user base increased 22% year over year to 71.5 million. In other words: an average of 71.5 million different users logged in to the platform every day.

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Thanks to the expansion of the user base, the total number of engagement hours recorded on the platform increased by 21% to 15.5 billion. Coupled with the fact that average bookings per daily active user rose 3% year-over-year to $15.75 in the quarter, this helped the company achieve record revenue and bookings.

With Roblox stock still down 74% from the high it reached in 2021, shares look like a smart buy for growth-oriented investors right now.

Should you invest $1,000 in Revolve Group now?

Before you buy shares in Revolve Group, consider the following:

The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Revolve Group wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.

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There’s a Bull Market: Two Top Stocks Fall 72% and 74% to Buy Now, originally published by The Motley Fool

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