But the company is growing where it matters most. Second-quarter revenues rose 41% year over year and the number of monthly active users increased by 40%. Meanwhile, paid subscriptions saw a 52% jump and FCF soared 60% higher.

In other words, Duolingo is building a launch ramp toward its long-term business goals on a robust foundation of user interest and cash profits. The recent additions of math and music courses indicates that Duolingo aims for a broader e-learning portfolio in the long run. The global online learning market was worth more than $165 billion in 2023 and should grow by more than 50% over the next five years. Duolingo’s slice of that massive revenue pie was about 0.3% of the total market last year. The room to grow is quite staggering, and this company is making the most of the opportunity.

So I don’t mind paying a premium for Duolingo’s stock today. This little company is going places — fast.

And then there’s Roku. The media-streaming technology expert has been around from the start, essentially defining the market for digital set-top boxes when it was the hardware division of Netflix. As a stand-alone business, Roku already dominates the North American streaming platform industry and is now exploring international growth — much like its former parent company did a decade ago.

This company addresses another epic target market. Media-streaming services are stealing the lunch of cable, satellite, and broadcast media around the world. Movie theaters are losing their iron grip to digital alternatives, and FM radio looks obsolete. Roku doesn’t do a lot of hardware sales anymore, having shifted its strategy to software sales and licensing. As long as the digital media market is growing, so will Roku. The lessons learned domestically should pay dividends when applied to other media markets.

Roku’s sales are soaring and free cash flows are bouncing back from a visit to the negative side of the street:

Market makers are shrugging off Roku’s enormous growth prospects and proven cash profits, focusing on its negative after-tax earnings and a struggling digital advertising market instead. As a result, the stock hangs out in Wall Street’s bargain basement with a price-to-sales ratio of 3.0. Online advertising can’t stay weak forever, and Roku’s overseas adventure is just getting started.

This stock is starting from a much more forgiving valuation. Making a modest Roku investment today should reward you with huge long-term returns.

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*Stock Advisor returns as of October 21, 2024

Anders Bylund has positions in Duolingo, Netflix, Nvidia, and Roku. The Motley Fool has positions in and recommends Apple, Duolingo, Netflix, Nvidia, and Roku. The Motley Fool has a disclosure policy.

Should You Forget Nvidia and Buy These 2 Millionaire-Maker Stocks Instead? was originally published by The Motley Fool