The recent tech selloff has left many high-growth tech stocks trading well below their intrinsic value. While Wall Street remains laser-focused on profits in the near term, I believe the ongoing rally in artificial intelligence has some investors overlooking diamonds in the rough. As the economy eventually re-accelerates, these underappreciated stocks will see tremendous growth. That’s why it’s time to get in early on these gems, before they come into the spotlight.
In my view, growth remains plentiful in the tech sector, despite the increased spotlight on profitability. Many companies continue investing heavily in R&D and expanding into new markets, setting themselves up for explosive growth when conditions improve. The key is finding those stocks Wall Street has overlooked in its short-term thinking.
Here are three tech stocks perfectly-positioned to deliver that kind of upside.
Luminar Technologies (LAZR)
Lidar sensor maker Luminar Technologies (NASDAQ:LAZR) has been absolutely clobbered amid the recent tech selloff, with shares plummeting over 84% from its peak. However, in my view, that brutal selloff has created a golden buying opportunity. I believe Luminar’s long-term growth story remains intact, and autonomous vehicle technology will transform transportation in the years ahead.
Don’t get me wrong, lidar is still expensive compared to traditional sensors used in this space. But costs have plunged rapidly, with Luminar announcing a $500 solution this year. In my opinion, this cost curve unlocks a world of possibilities in ADAS and autonomous vehicles. Luminar recently posted strong Q2 results, with revenue up over 63%. The company expects its order book to swell to $60 billion by the decade’s end.
Despite the market’s laser-like focus on profits today, Luminar continues investing heavily in R&D and manufacturing to dominate the autonomous future. The company remains on track to achieve key milestones around cost, production scale, and its tech rollouts. Doubters will point to Luminar’s reliance on fickle EV demand. However, the company has smartly diversified across auto OEMs, trucking fleets, lidar software players, and even aerospace leaders like NASA.
In my view, Luminar boasts game-changing capabilities, cost roadmaps, and a thriving customer ecosystem. This emerging leader looks poised for massive growth in the years ahead as autonomous vehicles go mainstream. Revenue growth of more than 107% is projected for next year, and 200%+ the year after. I believe this presents a golden buying opportunity for investors who can look past the market’s short-term obsession with profits.
Luminar offers a compelling option for insteps looking to play the transformative secular trends around vehicle autonomy and electrification. Paying a premium today for this explosive growth story could deliver enormous returns over the next five years.
Wallbox (WBX)
Meanwhile, beaten-down EV charging play Wallbox (NYSE:WBX) looks like another diamond in the rough, in my opinion. While Wall Street frets over macro headwinds, the big-picture growth story for EV charging build-out remains as compelling as ever.
EV sales are absolutely exploding globally, yet charging infrastructure development badly lags surging demand. By some estimates, to support projected EV growth over the next decade, the number of charging stations must grow 10x. While government funding and utility investment should help scale infrastructure, companies like Wallbox will likely do most of the heavy lifting.
Despite the gloomy environment, Wallbox still grew 2022 revenue by 73%, led by strong performance in the U.S. and its fledgling DC fast-charging business. Wallbox is aggressively expanding into new regions while recently securing a major deal with Costco (NASDAQ:COST). That kind of partnership provides major visibility and scale. It expects to grow DC fast-charging sales by 300% this year. That’s the kind of triple-digit growth investors should be focused on.
Admittedly, guidance has been reeled in due to the uncertainty. But with a strengthened balance sheet, Wallbox looks ready to weather the storm. As a vertically integrated charging OEM with global reach, Wallbox boasts key advantages in its technology, speed to market, and manufacturing flexibility. In my view, once EV growth accelerates again and government charging investments pick up, this ambitious player will see surging demand across all product lines.
After plunging nearly 84% from its highs, and massive growth still anticipated over the next decade, Wallbox offers a very compelling risk/reward at current levels for investors willing to adopt a long-term mindset.
Enphase Energy (ENPH)
Lastly, in the battered solar sector, microinverter leader Enphase Energy (NASDAQ:ENPH) really stands out to me as an overlooked turnaround play. Despite strong profitability and cash flow generation, Enphase has been lumped in with profitless tech stocks amid the broader selloff. However, with the Inflation Reduction Act set to supercharge U.S. solar demand, I believe Enphase is gearing up for a major comeback.
The company just posted sensational Q2 results, with revenue up 34% and earnings per share doubling year-over-year. While management issued cautious Q3 guidance due to inventory normalization in the U.S., they also reiterated confidence in their growth. Enphase is also aggressively expanding overseas, with its European business tripling year-over-year year at healthy gross margin.
In my view, Enphase boasts key competitive advantages in product quality, reliability, and integrated energy management capabilities. The company continues innovating rapidly, with several promising new product introductions on the horizon. Enphase is also ramping up domestic manufacturing capacity, which should provide financial benefits and improve supply chain resilience.
Despite triple-digit profit growth, ENPH stock still trades at a reasonable 25-times 2023 earnings, and below 10-times forward 2030 earnings. That’s a bargain valuation for a company executing so strongly, in my opinion. With solar penetration still low (even in the U.S. market), I believe Enphase has an extensive runway for worldwide growth. The stock appears significantly oversold, given the company’s rock-solid financial position. Enphase could stage a major rebound on any hint of macro stabilization.
On the date of publication, Omor Ibne Ehsan 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.
