1Roku (ROKU)
Shares of streaming device maker Roku (NASDAQ:ROKU) have dropped about 13% over the past month on coronavirus concerns. But one could very reasonably argue that the outbreak is actually a net positive for ROKU stock for two big reasons.
Roku is a richly valued growth stock trading at 8.3-times forward sales. In a world of 4% to 5% interest rates, an 8.3-times forward sales multiple for Roku wouldn’t make much sense. But, the 10-Year Treasury yield has plunged to a record low 1.3%. In that low rate world, an 8.3-times forward sales multiple makes a lot of sense, because low yields translate into low discount rates, which provide support for extended equity valuations.
