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2 Monster Stocks to Buy in the Wake of the Nasdaq Correction

Source The Motley Fool

Wall Street fears a recession on the horizon, which has rattled the markets in 2025. The Nasdaq Composite is down 16% year to date at the time of writing.

It's never easy to stay focused on the long term when a market correction strikes. But there are growing companies you can buy amid the market turmoil that could grow your savings over the next several years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

The following two companies are competitively positioned for growth in digital advertising and entertainment. Here's why Reddit (NYSE: RDDT) and Netflix (NASDAQ: NFLX) could be rewarding investments over the next few years.

1. Reddit

Reddit is a high-growth social media platform, with an advantage in having a large base of users that are potentially high-intent shoppers. This puts Reddit in an advantageous position to win a share of the $700 billion digital advertising market.

Reddit is showing the level of growth you would expect ahead of such a large opportunity. Its advertising revenue grew 50% year-over-year in 2024 to reach $1.2 billion. Growth accelerated in the fourth quarter, with ad revenue up 60% over the year-ago quarter.

Close to half of the discussions on the platform are related to products that people might purchase. This is very appealing to brands. It's making each one of the 101 million daily active unique users on Reddit more valuable to these advertisers. Average revenue per unique increased 23% year-over-year in Q4, and that's on top of 39% growth in the number of daily active uniques on Reddit.

The stock looked expensive heading into 2025, but fears of a slower ad market have brought the stock down 59% off recent highs and trading at a much more reasonable price to start an investment. The digital ad market could slow in the near term, but Reddit is growing off such a small revenue base that it can continue to grow at healthy rates.

Analysts expect Reddit's total revenue to reach $3.5 billion by 2028, up from $1.3 billion last year.

Reddit stock currently trades at just 32 times this year's earnings estimate, which is a bargain for a company that could double its revenue in a few years. When the stock market recovers, Reddit could deliver monster gains from these depressed share prices.

2. Netflix

Shares of the leading streaming service have delivered monster returns for investors since the previous market sell-off in 2022. Even as the stock trades around the $1,000 level, Netflix's momentum in signing up new members and expanding margins could still lift the stock higher over the next few years.

Netflix reported another strong quarter, with revenue up 12% year-over-year. The service now has more than 300 million paid memberships. Equally impressive is the growth in earnings per share, which grew 25% year-over-year.

There is still a tremendous opportunity for the streaming leader. more than 5 billion people have access to the internet worldwide, according to Statista, and the number of people with broadband internet exceeded 1.6 billion in 2024.

There's no streaming service in better position to win a sizable share of these broadband users than Netflix. It has a large library of content. Moreover, Netflix has offices around the world that have widened its understanding of different cultures and entertainment preferences. The company spends billions every year on content production worldwide, which has led to a growing catalog of shows and films that connect with a diverse audience.

Netflix has built this extensive infrastructure while delivering growth on the top and bottom line to power the stock higher. Analysts expect Netflix's earnings to reach $37 by 2027, up 75% from trailing-12-month earnings. Assuming the stock is still trading at the same valuation, investors could see a similar return on their investment.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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