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The growth-heavy Nasdaq Composite has dipped in and out of bear market territory this year. Many investors are worried that the combination of rampant inflation, geopolitical conflict, and rising interest rates will cause a significant pullback in spending. In turn, that would negatively affect corporate revenue and profits. So to minimize near-term risk, many investors have been selling stocks, especially richly-valued growth stocks.

However, some analysts think that selling is overdone. For instance, Daniel Kurnos of investment banking firm Benchmark has a price target of $305 on Roku ( ROKU -4.40% ), implying 166% upside from its current price. Similarly, JMP Securities analyst Devin Ryan has a price target of $394 on Coinbase Global ( COIN -4.84% ), implying 145% upside from its current price.

Given those analysts’ bullish outlooks, let’s take a closer look at both stocks.

A group of young adults is watching TV together.

Image source: Getty Images.

1. Roku

For millions of people, Roku has become the gateway to streaming entertainment. In fact, its platform powered nearly 32% of “big screen” (or television) viewing time last year, up 70 basis points from 2020. Meanwhile, second-place rival Amazon Fire TV captured just 16.5% market share, down 270 basis points from the prior year. Put another way, Roku is becoming more dominant, while its closest competitor is losing ground.

What’s driving that success? Management points to its operating system. Roku OS is the only operating system purpose-built for TV. Competing solutions like Amazon’s Fire OS are modified versions of a mobile operating system. Roku believes its purpose-built approach creates a better viewing experience. CEO Anthony Wood recently said, “If you look at the history of computing platforms […] purpose-built operating systems traditionally have always won in terms of market share.”

In addition, Roku has also been investing in its ad-supported streaming service, The Roku Channel. It released more than 50 original titles in 2021, including its first feature-length film. With that strategy, Roku aims to drive viewer engagement (and ad spend) by further differentiating its platform. The early results are promising. In 2021, half of the top 10 titles on The Roku Channel were Roku Originals, and The Roku Channel itself ranked among the top five channels on the platform in the third and fourth quarters.

In turn, monetized ad impressions on Roku’s platform nearly doubled in 2021, which translated into strong financial results. Revenue soared 55% to $2.8 billion last year, and the company generated $188 million in free cash flow, up nearly threefold from $66 million in 2020. But shareholders have good reason to believe Roku can maintain that momentum.

For many people, streaming media is already the go-to option for home entertainment, but ad budgets are still playing catch-up. Case in point: Connected TV (CTV) ad spend totaled $13.4 billion in the U.S. last year, but marketers spent $65.9 billion, nearly five times as much, on linear TV ads, according to eMarketer. As ad budgets continue to follow viewers to CTV, Roku should benefit. From that perspective, this growth stock could certainly generate 166% returns in the near term, but Roku is better viewed as a long-term investment.

2. Coinbase Global

Coinbase is the largest U.S. cryptocurrency exchange. Its platform offers a range of services to retail traders and institutional investors, helping them securely buy, sell, spend, store, and stake crypto assets. The company has achieved significant scale as it currently holds a market-leading 11.5% of all crypto assets on its platform. That creates a deep pool of liquidity that Coinbase can use to fund growth initiatives like its soon-to-launch non-fungible token (NFT) marketplace.

More broadly, the Coinbase brand inspires trust, and for many investors, it has become synonymous with cryptocurrency. That has led to strong financial results. In 2021, Coinbase saw its number of monthly transacting users grow fourfold to 11.4 million, and trading volume rose more than eightfold to $1.7 trillion. In turn, revenue skyrocketed 514% to $7.8 billion, and GAAP earnings grew more than tenfold to $14.50 per diluted share.

Looking ahead, Coinbase is well positioned to maintain that momentum. Cryptocurrencies are nothing if not volatile, and the company benefits from that volatility. Most of its revenue is generated through transaction fees. In other words, the more people trade, the more money Coinbase makes. And the crypto market has crashed twice in the past 12 months, meaning a lot of cryptocurrency was being bought and sold.

In addition, Coinbase CEO Brian Armstrong believes the coming NFT marketplace could be bigger than its current cryptocurrency business. From that perspective, the analyst’s price target of $394 seems entirely plausible. That being said, even if Coinbase stock continues to underperform in the short term, it still looks like a smart choice for patient investors, especially if you believe in the future of the crypto economy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.