If you’re willing to attempt a difficult balancing act in seeking out a discount and potentially imminent upside momentum at roughly the same time, these adventurous undervalued growth stocks could be up your alley. While it might seem too good to be true, with thousands of tradable securities available, at least a few truly compelling ideas will likely slip under the radar.
For this list of top growth stocks to buy at a discount, I’m indebted to investment resource and data aggregator Gurufocus. Through its platform, I first filtered for enterprises that posted a total revenue growth rate of at least 25%. This way, we’re dealing with true high-potential growth stocks that can be objectively verified.
Next, I sought companies whose securities were undervalued based on trailing-year earnings, book value, and sales. Sometimes, unusual dynamics can lead to one metric appearing incredibly discounted. However, with three key stats priced conspicuously below their sector median values, we’re more likely to find the best stocks for investment at attractive rates.
| SACH | Sachem Capital | $3.41 |
| ZYME | Zymeworks | $8.52 |
| ACMR | ACM Research | $10.69 |
Sachem Capital (SACH)
A real estate investment trust, Sachem Capital (NYSEAMERICAN:SACH) admittedly presents high risks for undervalued growth stocks. Per its public profile, Sachem specializes in originating, underwriting, funding, servicing, and managing a portfolio of first mortgage loans. With rising borrowing costs impacting sentiment across the board, SACH seems quite an aggressive proposition.
Though choppy, SACH managed to gain almost 9% of equity value since the start of the year. Moreover, its website states that Sachem offers short-term (usually 12 to 36 months), secured, non-banking loans to real estate investors. Theoretically, then, its exposure to circumstances going awry is significantly mitigated.
But what really makes SACH one of the discounted top growth stocks to buy centers on its financials. Despite significant challenges, Sachem posted consecutively rising revenue from 2019 through 2022. Also, in the first quarter of 2023, the company posted sales of $7.43 million, up 22.4% year-over-year. Despite the outperformance, SACH trades at a price-to-sales ratio of 4.54, ranked better than 69.58% of the competition. Finally, Wall Street analysts peg SACH as a consensus moderate buy. Their average price target lands at $4.75, implying over 38% upside potential.
Zymeworks (ZYME)
Based in Vancouver, British Columbia, Zymeworks (NASDAQ:ZYME) is one of Canada’s most compelling (albeit incredibly risky) clinical-stage biopharmaceutical companies. Per its public profile, Zymeworks focuses on developing next-generation multifunctional biotherapeutics. Further, its suite of platforms and fully integrated drug development engine enables the precise engineering of highly differentiated product candidates. From a scientific perspective, ZYME makes an intriguing case for high-potential growth stocks.
Moreover, ZYME might rank among the top undervalued growth stocks thanks to its attractive industry acumen. For example, Zymeworks received a buyout offer for $10.50 a share. However, management rejected the proposal as too low. At the time of writing, shares trade hands at under $9. Therefore, additional room for value expansion may exist.
Notably, Zymeworks features decent strengths in the balance sheet, with an Altman Z-Score of 3.81 indicating a low risk of bankruptcy. Also, it features a return on equity of 52.28%, blowing past 98.59% of its peers. Lastly, analysts peg ZYME as a moderate buy with a price target of $12.88, implying almost 48% upside potential. Thus, it could be one of the best stocks for investment for speculators.
ACM Research (ACMR)
If you’re looking to buy growth stocks now and you’re willing to throw caution to the wind, ACM Research (NASDAQ:ACMR) might be a tempting opportunity. Per its corporate profile, ACM develops, manufactures, and sells semiconductor process equipment for single-wafer or batch wet cleaning, electroplating, stress-free polishing, and thermal processes. This specialty is critical to advanced semiconductor device manufacturing as well as wafer-level packaging.
Financially, ACM makes a great case for undervalued growth stocks because it hits both components hard. For the latter, total revenue expanded (on a consecutive basis) from $27.4 million in 2016 to $388.8 million in 2022. Moreover, in Q1 2023, the company rang up sales of $74.3 million, up 76% YOY.
Despite the robust outperformance, the market prices ACMR at a trailing sales multiple of 1.73. As a discount to revenue, the company ranks better than 65.36% of the competition. Just for good measure, it also trades at a forward multiple of 10.74. This stat compares favorably to the sector median value of 24.1 times. Turning to the Street, analysts peg ACMR as a unanimous strong buy. Their average price target stands at $25, implying over 136% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
