▶ Full Post Text
**The Market Still Doesn’t Know How to Price Growth Stocks**
I wanted to find companies that combine growth with actual financial quality rather than just screening for companies with the highest revenue growth.
My criteria were simple:
**20%+ TTM revenue growth**
**Positive free cash flow**
**Net cash**
**EV/FCF below 30x**
There is no market-cap restriction. The idea is to compare companies across the market and see where growth is actually being priced attractively.
**A group of companies where business fundamentals have continued growing strongly, but the stocks have generally been repriced downward.**
Here is what survived the screen:
|Company|TTM rev. growth|Market cap|Net cash|TTM FCF|EV / FCF|P/E|1Y change|
|:-|:-|:-|:-|:-|:-|:-|:-|
|Reddit (RDDT)|66.6%|\~$30B|$2.77B|\~$1.02B|\~26.5×|\~36×|\-25.5%|
|DLocal (DLO)\*|57.0%|\~$4.4B|\~$0.81B\*|\~$427M\*|\~8.4×\*|\~22×|\+4.8%|
|Sea (SE)|43.1%|\~$75B|$4.97B|\~$4.21B|\~16–17×|\~46×|\-34.2%|
|Innodata (INOD)|39.0%|\~$1.9B|\~$247M|\~$184M|\~9.2×|\~42×|\+59.7%|
|Duolingo (DUOL)|29.4%|\~$6.6B|\~$1.23B|\~$408M|\~13×|\~17×|\-55.1%|
|Klaviyo (KVYO)|28.9%|\~$5.7B|$719M|\~$253M|\~19×|N/M|\-46.5%|
|GitLab (GTLB)|24.9%|\~$7.0B|$1.36B|\~$263M|\~22–24×|N/M|\+3.3%|
|[monday.com](http://monday.com) (MNDY)|24.2%|\~$4.0B|\~$835M|\~$298M|\~11×|\~41×|\-56.7%|
The interesting thing is that there isn't one obvious winner. Each company is cheap for a different reason, and each has a different weakness.
**I wasn't originally screening for beaten-down stocks. But almost every company that passed this growth + FCF + balance-sheet screen had been crushed or derated over the past year. The businesses kept growing. The multiples didn't.**
# DLO
On paper DLO may be the cheapest stock on the entire list.
57% revenue growth and around 8x EV/FCF looks ridiculous.
But I would be careful with the headline numbers because dLocal is a payments company. A portion of its cash and cash flow relates to merchant balances and working capital, so its reported cash and FCF aren't directly comparable with something like a software company.
It may still be cheap, but I wouldn't blindly conclude that it is trading at 8x clean owner earnings.
# Innodata
INOD is probably the most interesting small-cap statistically.
39% revenue growth at around 9x EV/FCF with a net cash balance sheet is extremely attractive.
The problem is customer concentration.
Its two largest customers account for roughly 70% of revenue. If one hyperscaler changes suppliers or reduces spending, the entire earnings profile can change very quickly.
So the valuation makes more sense once you account for concentration risk.
# [monday.com](http://monday.com)
MNDY may have one of the cleanest valuations here.
It is growing around 24%, has roughly 20% of its market cap in net cash, generates almost $300M of FCF and trades at only around 11x EV/FCF.
It is also buying back shares rather than endlessly diluting shareholders.
The market's concern seems pretty clear: AI could commoditize parts of project-management and workflow software.
If AI disruption turns out to be less severe than expected, MNDY looks genuinely cheap.
# Duolingo
DUOL also looks unusually attractive on trailing numbers.
Around 29% TTM growth, more than $1B net cash and roughly 13x EV/FCF is a very healthy setup.
The problem is growth deceleration.
The latest quarterly growth rate has already dropped materially below its TTM rate. So the important question isn't whether DUOL was growing 29%. It is whether it can maintain 20%+ growth going forward.
If growth stabilizes or accelerates again, this could become one of the more interesting names here.
# Klaviyo
KVYO gives you close to 30% revenue growth at around 19x EV/FCF.
That initially looks attractive.
My main concern is dilution and stock-based compensation. A business can report strong FCF while transferring a meaningful part of that economic value to employees through SBC.
So for KVYO I would focus much more on **FCF per diluted share** than headline company-wide FCF.
# GitLab
GTLB has a beautiful balance sheet: around $1.36B net cash, no meaningful debt and roughly 25% growth.
Its valuation at low-20s EV/FCF isn't excessive either.
But it still needs to prove that GAAP profitability and operating leverage can become durable. It is attractive, but doesn't look obviously mispriced compared with some of the others.
# Sea Limited
Removing the $50B market-cap restriction uncovered what may be the strongest large-company candidate.
Sea is growing more than 40%, has around $5B net cash and generates more than $4B of TTM FCF.
At roughly 16-17x EV/FCF, it is significantly cheaper than Reddit on current cash flow.
That's a very strong setup.
The difference is economics.
Sea operates e-commerce, gaming and financial services businesses that require substantially more operating infrastructure and capital than Reddit. Its FCF margin is around the mid-teens compared with Reddit in the mid-30s.
Still, SE is probably the strongest direct challenge to the argument that Reddit is uniquely cheap.
# And then there is Reddit
Reddit is actually one of the **more expensive companies on this table by EV/FCF**.
That's important to acknowledge.
At around 26x EV/FCF, you can clearly buy INOD, MNDY, DUOL or SE for lower cash-flow multiples.
But then look at the growth column.
**RDDT: 66.6%**
Nothing else in this group is particularly close while maintaining a similarly clean financial profile.
Reddit has roughly:
**$2.8B net cash**
**No meaningful debt**
**\~$1B TTM free cash flow**
**\~90% gross margin**
**\~35%+ FCF margin**
**Positive GAAP earnings**
**60%+ revenue growth**
And the market cap is still only around **$30B**.
That combination is what makes it unusual.
You can find cheaper companies.
You can find faster-growing companies.
You can find companies with stronger balance sheets.
But it becomes surprisingly difficult to find a company that combines **this level of growth, profitability, FCF generation, gross margin and balance-sheet strength at the same time.**
Even companies that grow faster than Reddit generally fail the valuation screen.
Palantir, for example, has extraordinary growth and cash generation, but trades at well above 100x EV/FCF.
AppLovin is much closer. Its growth and cash generation are exceptional and its EV/FCF is actually lower than Reddit's, but it currently carries net debt, so it fails this particular screen.
That brings me to my conclusion.
I don't think Reddit is the cheapest stock in the market based on any single traditional valuation metric.
**I think Reddit may be one of the cheapest stocks relative to the quality and speed of its growth.**
And that's an important distinction.
At roughly $30B, Reddit is still sitting in the awkward area between a small/medium-sized growth company and what could eventually become a genuinely large global internet platform.
If revenue growth remains anywhere near current levels while FCF margins remain above 30%, the earnings denominator can grow extraordinarily quickly.
That is ultimately why, after comparing it with the other companies rather than looking at Reddit in isolation, I still find **RDDT the most compelling risk/reward setup in the group.**
Not because it has the lowest multiple.
Because it may have the best combination of **growth + financial health + operating leverage + remaining scale opportunity**.