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from the world of economics and financeTime in the market beats timing the market. That's no secret. Legendary investors didn't make their fortune by day-trading the hottest stock tips, but by holding stocks of game-changing market leaders for many years or even decades.
That said, even Warren Buffett prefers buying incredible businesses at a great price. That long-term holding period gets so much sweeter when you take off from a deeply undervalued starting point.
That's what Fiverr International (NYSE: FVRR) is today -- an undervalued growth stock with a modest share price and tremendous long-term business prospects.
This company's ambition is nothing short of revolutionary.
As a leading name in the gig economy, Fiverr wants to "change how the world works together." Management estimated the American addressable market for creative, technical, and professional freelancers to be worth $247 billion in 2021 and nearly all of it is managed through offline channels. Fiverr and Upwork (NASDAQ: UPWK) are the biggest names by far in this field, and their revenues added up to just $1.1 billion last year. The untapped opportunity is enormous.
So Fiverr has a long way to go and the company is off to a strong start.
You're looking at a perfectly healthy company here, pursuing high-octane growth in a massive market with even greater prospects if you include Fiverr's international expansion plans -- and the company is already turning a profit.
Yet, many investors still can't get over the image of Fiverr's freelance services as the epitome of a pandemic lockdown idea. The company was supposed to run out of growth fuel when effective vaccines started restoring the remote-work business world to more traditional operations.
So Fiverr's stock trades 94% below the all-time highs of early 2021, just before the COVID-19 vaccine rollout started. The stock is changing hands at the bargain-bin valuation of 9.8 times free cash flow or 2.2 times sales. And the skeptics are still running the Fiverr show. Share prices are down by 42% over the last year, including a 26% drop year-to-date.
Long story short, Fiverr is an ambitious and profitable company with grand growth plans and the ambition to change the nature of work and careers.
Bearish investors see a falling knife here, more likely to hurt your hands than help your portfolio if you tried to catch it on the way down.
I disagree. In my eyes, Fiverr is a deeply undervalued growth stock with tremendous potential to make money in the long term. I'd be a buyer at any reasonable valuation, and the current discount makes it a no-brainer buy in my book.
Fiverr is on the short list of great deals I'll look at first, whenever I find new money to invest. And I highly recommend adding this stock to your own list of promising "buy" ideas. Just getting back to the record price of early 2021 would be a 20-fold return on today's investment. Sales have nearly doubled since then, and free cash flows are up more than 500%.
This hungry little freelance services orchestrator is going places.
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Anders Bylund has positions in Fiverr International. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool recommends Upwork. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.