2 Top Growth Stocks That Could Easily Double

Advertising can be a tough business, subject to booms and busts as advertising spending dries up or is shifted around. The pandemic triggered a downturn in global advertising spending, and while the industry has bounced back, ad spending growth is sensitive to economic conditions and various other factors.

PubMatic specializes in helping digital publishers, content producers, and app developers monetize their content and applications. The company’s programmatic digital advertising platform aims to maximize revenue for its clients. PubMatic operates at an enormous scale, processing 1.8 trillion advertiser bids each day.

PubMatic’s growth slowed dramatically in 2023 due to a tough advertising environment, with revenue rising by just 4%. Business has picked up since then, with revenue growing by 13% year over year in the third quarter of 2024. Connected TV (CTV) is a big growth area, with CTV impressions more than doubling year over year in the quarter. And omnichannel video revenue grew by 25%, while mobile app revenue surged by more than 20%.

PubMatic owns and operates its own infrastructure instead of using a public cloud provider. So, as long as utilization rates are high, the company can efficiently process the enormous number of bids running through its platform. Through the first nine months of 2024, PubMatic recorded free cash flow of $26 million, down a bit from 2023 as the company ramps up capital spending. With a market capitalization of about $716 million, the stock trades for about 20 times the average analyst estimate from adjusted earnings per share.

As PubMatic shifts toward growth areas like CTV, the company can accelerate its revenue growth and ultimately drive earnings higher. As the adtech stock emerges from its downturn, it could be in for a major recovery.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $369,816!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,191!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $527,206!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of January 21, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Timothy Green has positions in DigitalOcean and PubMatic. The Motley Fool has positions in and recommends Amazon, DigitalOcean, Microsoft, and PubMatic. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

2 Top Growth Stocks That Could Easily Double was originally published by The Motley Fool