In the last month, the S&P 500 Index has fallen by less than 1%. During the same period, Tesla (NASDAQ:TSLA) stock has surged by 20%, and Marathon Oil (NYSE:MRO) has moved higher by 10%. That said, the point I want to make is that there will always be individual stocks that out-perform or significantly out-perform the index — irrespective of market condition. However, as broad markets look expensive, under-performers have been big movers. And there are still dozens of undervalued stocks.

With that in mind, let’s discuss four undervalued stocks that have the potential to rip higher in the next few quarters.

They are:

• Calliditas Therapeutics (NASDAQ:CALT)
• Sundial Growers (NASDAQ:SNDL)
• Lockheed Martin (NYSE:LMT)
• Electrameccanica Vehicles (NASDAQ:SOLO)

Undervalued Stocks That Could Rip Higher: Calliditas Therapeutics (CALT)

CALT stock has returned 14.5% in the last six months. However, I believe that the stock remains significantly undervalued at a current market value of $694 million. As an overview, Calliditas is a clinical stage biopharmaceutical company with a focus on inflammatory disease.

In terms of the pipeline, Nefecon is the company’s most advanced product candidate. If approved, it’s likely to be the first drug specifically designed for IgA Nephropathy (IgAN). The company has already successful randomized Phase 2B and Phase 3 clinical trials.

The company expects to file for accelerated approval with the U.S. Food and Drug Administration (FDA) and conditional approval with EMA in the first half of the year. Moreover, Calliditas said in their quarterly report presentation that the total market opportunity for IgAN is $9 to $10 billion. And that’s just in the United States. Therefore, if the drug is approved, the CALT stock can deliver robust returns.

In August 2020, Calliditas entered into an agreement to acquire controlling interest in Genkyotex SA. The latter is focused on a pipeline for anti-fibrotic and anti-inflammatory needs. The acquisition therefore increases the pipeline for the company.

From a financial perspective, the company has cash and equivalents of $161 million as of September 2020. This is likely to finance the company’s operations through the third quarter of 2022.

Collectively, CALT stock is undervalued and is yet to be discovered by the broader markets. And once the stock is in limelight, the upside can be significant.

Sundial Growers (SNDL)

In the last few months, SNDL stock has surged from $0.16 to it current price around $0.80. However, it remains in my list of undervalued stocks with potential for further upside in the coming quarters.

Cannabis stocks peaked out in March 2019, and this was followed by an extended bear market. Now with hopes of legalization through the United States, the sector has seen renewed investment focus. But, besides the growth outlook, I believe that Sundial can be a potential acquisition candidate.

Sundial has a portfolio of brands with a focus on delivering premium cannabis products. This includes pre-roll, vapes, oil and flower. The company has been introducing new stock-keeping unitx (SKUs) with a focus on inhalables. It’s also worth noting that the company’s branded cannabis sales were 77% of total sales for Q3 2020 as compared to 69% in Q2 2020. As branded sales increase, the company’s EBITDA margin is likely to witness improvement.

Another important point to note is that the company’s sales and marketing expense for Q3 2020 was higher by 120% on a year-over-year basis. As brand visibility increases, I expect top-line growth to accelerate.

SNDL stock may be down on Friday with news of a massive offering. But in the coming quarters, SNDL stock can surprise and surge higher.

Lockheed Martin (LMT)

In the last few months, investors have grabbed stocks from sectors that have under-performed for most part of fiscal year 2020. For example, JPMorgan Chase (NYSE:JPM) has trended higher by 33% in the last six months.

That said, I believe that LMT stock is another name that can surge higher in the next few months. LMT stock currently trades at a forward price-earnings (P/E) ratio of 12.5. This is a key reason to include the stock in my list of undervalued stocks. In addition to the upside potential, the stock offers an annual dividend of $10.40.

Furthermore, while LMT stock has remained depressed, the company’s order backlog has continued to swell. For Q3 2020, the company reported a record backlog for the ninth-consecutive quarter. This will translate into steady sales and robust operating cash flows.

Another reason to be bullish on the company is regional diversification. The company’s foreign military sales backlog has been increasing steadily. In particular, Lockheed Martin has secured F-16 orders from countries like Taiwan, Morocco and Bahrain — among others. Recently, Lockheed Martin also announced the acquisition of Aerojet Rocketdyne (NYSE:AJRD). The acquisition will help in accelerating growth in the areas of hypersonics and tactical missiles.

Overall, LMT stock looks good for a break-out on the upside. The stock is undervalued and fresh exposure can be considered at current levels.

Electrameccanica Vehicles (SOLO)

Electric vehicle (EV) stocks have surged in the past year. And in that sector, SOLO stock has moved higher by 268%. However, the stock still trades at a market value of $612 million, which is attractive.

I also like SOLO stock as the company has a differentiating factor within the highly competitive EV industry. The company is the designer and manufacturer of single-seat EV at an attractive price of $18,500.

As a whole, 76% of people in the United States travel to work by themselves in a car. Thus, a single-seat EV is probably a good choice. Electrameccanica is also increasing its retail footprint with presence in 13 locations in three Western states.

In the coming quarters, if the company can deliver healthy sales, I expect the stock to surge higher. And once retail sales gain traction, a $20 to $25 price target is achievable.

Currently, the company is focused in expanding presence in the U.S. However, the plan is to expand to Europe and Asia in the coming years. Another factor that I like about the company is the asset-light model. Currently, SOLO EV is being manufactured in China with the manufacturing partner having a strategic investment in the company. Therefore, a U.S. assembly facility is likely once sales volumes increase.

Overall, Electrameccanica comes with a unique EV concept and an attractive price tag. And if the product resonates with consumers, SOLO stock is likely to surge.

On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.