Reddit's strong growth metrics (revenue, users, profits) and low valuation (19x forward earnings) make it a compelling buy despite being down 45% from highs.

All right, number four on our list, Reddit. What do you like about Reddit today? Reddit stock down 45% from its all-time high. What is so interesting here is the growth narrative.

I mean, we're at two years of 60% or greater quarterly revenue growth. And as I continue to look at the trends from the business perspective, you know, this is a company that is increasing in its user base still at a very healthy rate.

So, daily users up 18% in the most recent quarter. What's so interesting here is that you know a billion new posts were in the most recent quarter. That is 4% of all the material that you can find on Reddit was created in the last 3 months.

So the engagement is still very strong and management pointing out that it recently made some changes. It is now it now had a 50% improvement in new user retention. A 50% improvement in retention.

I think that really bodess well bearing out in the numbers here. So advertisers increasingly comfortable with the Reddit platform. It the management team is kind of talking about it like Pinterest.

Like there's high intent for making a purchase on Reddit. So that makes it a little bit more favorable to advertisers, but the ad revenue in the most recent quarter up 64% year-over-year as you push that out over the the whole year.

Still expecting really good growth. And you know, the profits are growing faster than revenue. Pick your metric. free cash flow, operating cash flow, net income, all of these more than doubled year-over-year in the most recent quarter.

Yeah, you combine that revenue growth with that operating leverage, and the it's just phenomenal to see with a company like Reddit, I I still can't get over that this is not really a leader in any of its markets.

It's it's not a product that I use. So, it's always one of those companies that I continuously overlook.

The other thing that I just wanted to highlight is they are one of these data companies that's generating pretty significant revenue from companies like Google. I think the Google deal is about $60 million in revenue, but their total licensing is somewhere in that $150 to $200 million range.

Uh, and that's basically just AI agents scraping their more recent data. So, if you you think about if you're an AI looking for, hey, where am I going to find this piece of random information?

They'll go look at Reddit and go, "Hey, has someone posted about this recently?" And more likely than not, they have. And so that's why Reddit's often a source for a lot of these AI chat bots.

Not a huge revenue source for them, but that one that's another one that could grow pretty significantly over time.

Yeah. Trading at 19 times its forward earnings right now. Still expecting to grow 48% in the upcoming quarter. I mean, that's an incredible growth rate for that valuation.