Roku, Inc. Class A Stock News

Investors seemed to be tuning out Roku (ROKU -15.93%) stock in recent trading days. According to data compiled by S&P Global Market Intelligence, they pushed the specialty consumer electronics company's shares down by just under 18% week to date as of Friday morning.

Subscribers to  Chart of the Week  received this commentary on Sunday, March 30.

In a number of ways, Roku (ROKU -3.93%) has the makings of a market-beating growth stock.

Some of the best investments take their sweet time to develop. For example, Advanced Micro Devices (AMD -3.15%) entered the Intel (INTC 0.92%) compatible processor market in 1996, and then the stock largely trailed behind the S&P 500 (^GSPC -0.33%) for the next 20 years.

The future is always in flux. No one saw the COVID-19 pandemic coming.

Some investors think Roku (ROKU 6.07%) stock is expensive, and it's easy to see why. The media-streaming technologist's shares trade at lofty valuation ratios like 95 times free cash flows and 120 times forward earnings estimates.

ROKU has reignited growth and aims for GAAP profitability by 2026, supported by a strong net cash balance and low valuation. The company delivered impressive Q4 results with 17% YoY gross profit growth, and management guides for continued growth in 2025. Despite competitive risks, ROKU's valuation looks cheap, with potential 50% upside as it benefits from smart TV and digital advertising growth.

Roku (ROKU 8.11%) stock is surging Wednesday. The streaming specialist's share price was up 9.2% as of 3:15 p.m.