Roku is on the verge of profitability, a challenge that has long weighed on the stock.
All three of Sea Limited's growth-oriented business segments are in growth mode.
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Admittedly, Roku (NASDAQ: ROKU) may look more like a stock that investors should write off than a great growth name to some investors. It reached its record intraday high of $490.76 per share more than four years ago and still trades at more than a 75% discount to that price.
Nonetheless, Roku is the company leading a secular shift from traditional to streaming TV. Its platform brings viewers, content creators, and advertisers together. Moreover, it is the No. 1 streaming platform in the U.S., Canada, and Mexico, even though its size is a fraction of ad giants such as Alphabet and Amazon. Additionally, with efforts to expand in Latin America and Europe, its lead is enough to keep Roku competitive.
Amid such accolades, it appears finally ready to address a nagging doubt that has likely hampered the entertainment stock's success -- its lack of profitability. Roku earned a positive net income in the third quarter of 2025, and unlike the Q2 profit, it included positive operating income. Additionally, the company forecasts full-year profitability by next year.
Also, while the lack of profitability in two of the last four quarters left it without a P/E ratio, its price-to-sales (P/S) ratio is at 3.8, a level slightly above the S&P 500 average of around 3.5. Now that it is operationally profitable on a quarterly basis, Roku could finally have the catalyst it needs to draw investors back to the stock, eventually taking it to record highs and beyond.
Sea Limited (NYSE: SE) may not be a household name to American consumers. Still, the tech conglomerate owns what was the world's most popular mobile game in 2024, Free Fire, and its Shopee segment is the leading e-commerce company in Southeast Asia.
Despite a population of around 640 million, Southeast Asia is often overlooked, as the two countries bordering it, India and China, have populations of more than 1.4 billion each. However, Southeast Asia's population roughly matches that of Latin America and is nearly twice the size of the U.S., and the increasing wealth of the region should play into the hands of Sea Limited.
Even with this value proposition, the consumer discretionary stock suffered amid an ill-fated e-commerce expansion outside of Asia and a decline in gaming following the height of the pandemic that culminated in a Free Fire ban in India.
Fortunately, with the exception of Brazil, Sea Limited pulled out or scaled back its non-Southeast Asian operations. Also, mobile gaming has made a comeback, and Free Fire has returned to India. With fintech arm Monee remaining steady, all three segments are in growth mode.
Consequently, the company's net income attributable to shareholders for the first half of 2025 was $809 million, a massive gain from the $58 million earned during the same period in 2024.
Concerns about increasing e-commerce competition seem to have weighed on the stock recently, and the stock is down 22% from its 52-week high. Nonetheless, the stock has still risen by 46% this year.
Additionally, the 79 P/E ratio points to an elevated earnings multiple, but with a forward P/E ratio of 42 and rapid earnings growth, the stock could be cheaper than it appears. That lower forward multiple should bode well for Sea Limited as it remains strong in mobile gaming and continues to succeed in the populous but often ignored Southeast Asia region.
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Will Healy has positions in Roku and Sea Limited. The Motley Fool has positions in and recommends Alphabet, Amazon, Roku, and Sea Limited. The Motley Fool has a disclosure policy.