2025 is off to a robust start. Last month’s inflation rates were modest, and the three largest stock market indexes were up year to date as of Jan. 16. The stock market has generally soared recently, with tech stocks leading the charge in this bull market.
However, not every tech stock got the memo about impressive price gains. Some of my favorite stocks in this sector are trading far below their 52-week highs right now, but their business prospects still look great. With these diverging trends in mind, you should consider buying some Roku (NASDAQ: ROKU) and MongoDB (NASDAQ: MDB) shares in January.
Here’s why.
Let’s start with MongoDB. The next-generation database software expert’s trailing sales are up by 49% over the last two years. Free cash flows jumped 520% over the same period:
MongoDB’s stock has only gained 25% in this time span, though. To put that performance into context, the S&P 500 (SNPINDEX: ^GSPC) rose 49% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up by 75%.
The database expert’s chart includes a 29% drop since Dec. 9, 2024. The company reported third-quarter results that day, beating Wall Street’s consensus earnings estimates by 73%, while revenues came in 6% above the average analyst target. The stock still crumbled the next day because longtime CFO Michael Gordon also announced his resignation. The company also offered modest next-quarter guidance, but that should be less interesting because MongoDB has a habit of lowballing its earnings projections.
And Gordon is leaving on friendly terms. He is still doing investor conference presentations, and the topic of his departure didn’t even come up for discussion. Instead, Gordon spent most of that fireside chat underscoring how healthy the demand is for MongoDB’s ultra-flexible database solutions. In particular, the cloud-based Atlas database is becoming a popular data manager for large-scale artificial intelligence (AI) projects.
I’ll admit that MongoDB’s stock isn’t cheap based on traditional metrics. At the same time, the company has earned its 74x price-to-earnings ratio by growing sales at a compound annual rate of 45% over the last five years. The recent stock price discount looks like a wide-open buying window.
Roku’s story is surprisingly similar to MongoDB’s. Many investors wrote it off as a play on the coronavirus lockdowns of 2020, driving the high-flying market darling down into Wall Street’s bargain basement in 2022 and 2023. The stock has mainly floated sideways since then, including a 19% price drop in the generally booming market year of 2024.
