[NASDAQ: ROKU]: Roku Inc. (ROKU) was one of the most trending counters yesterday. This follows Q4 results showing that active accounts increased by 40%. The number of streaming hours also increased by 68% to 7.3 billion hours. This clearly shows that demand for Roku services is on the rise. For investors, this is a positive indicator that this company is on a growth trajectory, which is a plus to its value growth in 2019. By extension, this means that Roku is a stock worth investing in, in 2019. From a look at its numbers, it becomes even clearer that Roku is a hot stock for 2019.
First, the company has a negative levered free cash. For a company that is posting a more than 60% growth in customer numbers, this is a plus. This means the company is putting all its resources into investment. It means that it is likely to keep growing going into 2019 and beyond, and as it grows, so will the value of its stock. The company has already shown that its investments are paying off if Q4 number is anything to go by.
But even with a negative levered free cash flow, the company has a current ratio of 2.04. This is an indicator that the company is in a very strong position to take care of all its debts, with ease. Not many companies have a current ratio that is higher than 1. This can only mean that the company’s revenues are so high that they can comfortably handle all the debts that it may have incurred to grow its operations. This is backed by the company’s revenue growth. As per its books, the company’s quarterly revenue growth (yoy) stands at 38.90%. This is quite high, and an indicator that the company will break even soon, and start posting positive profit margins since they are negative at the moment.
Fundamentals aside, the company’s price action reveals that it is well positioned for growth in coming quarters. The company is trading at a loss of 28.94% in the last 12-months. In the past 12-months, it has dropped from a high of 77.57, a slide that saw it break the 200-day moving average support level at $51.22. At the moment, it is trading at $40, with the 50-day moving average acting as major support. With the growth that this company has shown in Q4 of 2018, this support is likely to hold. This makes Roku a high potential stock that could make it big in 2019. As long as this growth sustains, Roku is highly undervalued at current prices and has a real chance of retesting the 52-week high of $77.57.
This is a stock that has the potential to give not just growth in value but could also be a stable dividend paying stock in the future. Its prospects look good not just in 2019, but for years to come. Streaming is a growth market and Roku has an edge in it.