The market goes through bull and bear cycles, and each one offers opportunities for investors. Bull markets are the growth part of the cycle, and they happen much more frequently than bear markets.

One thing that doesn't typify bull markets is the opportunity to buy top stocks on the dip -- investors have to do some careful scouting to find bull market bargains. Revolve Group (RVLV 1.57%) and Roblox (RBLX -0.80%) are two top stocks to buy on the dip today. Here's why.

The future of fashion includes AI

Jennifer Saibil: Revolve has two sister sites, Revolve and the haute couture site FWRD, where it offers premium fashion designs for the Millennial and Gen Z markets. Revolve is all digital and has always used artificial intelligence (AI) throughout its operations, and its rich trove of data gives it tremendous power to offer merchandise it knows its customers want and charge full price for it.

Revolve's core customers are typically willing to spend top dollar for high fashion, but they aren't necessarily affluent and are cutting back now. Sales were down 1% year over year in the 2023 fourth quarter and 3% for the full year. Net income was down 53% for the quarter and 52% for the year.

As depressing as that is, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and even net income remained in the positive.

In the meantime, Revolve is demonstrating resilience. Sales are slightly down, but inventory is down more, 5% from the previous year. That contributed to the first increase in gross margin in six quarters in the fourth quarter. The company is focusing on being cash efficient, and free cash flow increased 114% year over year to $39 million 2023.

Revolve is doing what it does best, building relationships with its loyal customers to generate engagement, and it's still adding customers. Active customers increased 9% year over year in the fourth quarter, and total orders placed increased 3%. Average order value decreased 1% from last year, accounting for the sales decline, as loyal customers stay with Revolve but switch to lower-cost items while under pressure.

The stock is down 72% since highs in 2021. It climbed quickly when sales growth soared and was set up to fall when high inflation hit, but it's managing through this tough time and should reward patient investors who buy today.

Roblox stock is poised for a big comeback

Keith Noonan: Roblox was one of the first major movers in the metaverse space and remains a clear leader in the category. The company's platform houses thousands of unique games and social experiences. Users can also create their own content on the platform.

By spending real-world money to unlock in-world currency, creators can build their own games and experiences for other users to enjoy. If this content winds up attracting significant engagement from other users, the creators can actually earn substantial amounts of real-world cash.

For example, Roblox paid out $221.8 million to creators on its platform in the 2023 fourth quarter -- up 22% year over year. The incentive structure means that new content is being added to the platform all the time, and popular games and experiences regularly receive significant content updates in order to keep users engaged.

When combined with the platform's heavy online-socialization component, this means that there's almost always something new to do and see on Roblox.

In the fourth quarter, Roblox managed to grow its bookings 25% year over year to reach roughly $1.13 billion. Part of total bookings goes to paying out creators on the platform, so sales for the period came in at roughly $749.9 million -- good for growth of 30% year over year. Meanwhile, net operating income rose 20% year over year to hit $143.3 million.

The strong growth in Q4 was powered by continued expansion of the platform's user base and an increase in the average amount of spending and bookings generated per user. Roblox's average daily active user base rose 22% year over year to hit 71.5 million. In other words, an average of 71.5 million distinct users logged onto the platform each day.

Thanks to the user base expansion, total engagement hours registered on the platform jumped 21% to hit 15.5 billion. Along with average bookings per daily active user in the quarter increasing 3% year over year to reach $15.75, this helped the business post record revenue and bookings.

With Roblox stock still down 74% from the high that it reached in 2021, shares look like a smart buy for growth-focused investors right now.