I've Looked at Every Major Growth Stock Right Now. This Is the One I'd Buy Today.

Key Points

This once-hot stock has fallen out of favor and has remained so for some time.

As Warren Buffett has said, however, “You can’t buy what is popular and do well.”

Most investors aren’t seeing that this long-disappointing company may have finally found a business model capable of turning a reliably growing profit.

• 10 stocks we like better than Snap ›

One of the coolest aspects of my job is keeping tabs on all of the stock market's most important growth names. Not all of them are always worth buying, or even holding. They're all always fun to watch, though.

That said, there's one name in particular that's recently caught my eye as a new purchase prospect. That's Snapchat parent Snap (NYSE: SNAP).

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Yes, that Snap

Surprised? It would be a little surprising if you weren't. I know I was. This relatively small social media platform hasn't garnered much attention since the wind-down of the COVID-19 pandemic. The stock hasn't performed very well since then, either.

There's something curious going on here, however. Despite its presumed lack of relevance, last year's revenue grew by 11%, leading to a 36% year-over-year improvement in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and dialing back 2024's net loss by 34%. Analysts are looking for comparable progress this year and next, en route to the tiniest of profits by 2028.

Connect the dots. After 14 years, the company may have finally figured out the right, sustainable business model. That's its free-to-use, ad-supported platform combined with subscription-based Snapchat+ (which now boasts 24 million users) and the monetization of small, individual content creators.

Then there's the other thing. That's the recent interest from activist investor outfit Irenic.

Although activist investors are often viewed as meddlesome and misguided -- sometimes ultimately doing more harm than good -- in this instance, the involvement also tacitly suggests there's potential with Snap that's just waiting to be unlocked. Irenic argues that Snap could be worth as much as $35 billion, well up from its current market cap of $8 billion.

Still lots of risk, but even more reward

There's still above-average risk here to be sure. It's paired with above-average upside, though. Snap is one of the few names that haven't soared since 2022's low, or even since early this month when the market began rallying again. From where I sit, the market's overestimating the risk here and underestimating Snap's potential upside.

Should you buy stock in Snap right now?

Before you buy stock in Snap, consider this:

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.