In general, stocks generate outsized returns because the Street has been overly bearish on their outlook. Due to the Street’s overdone high interest rate concerns, it’s now unduly pessimistic about many growth equities with great futures. Companies being disrupted will indeed likely falter or fail due to elevated rates. But, despite high rates, rapidly growing firms will still be able to thrive because of the U.S.’s capital that can be deployed to growth-minded companies. Moreover, a multitude of consumers, companies and governments have plenty of funds to buy high-quality products. Here are three companies whose futures are being greatly underestimated by the Street, making them great stocks to buy for big returns.
Bionano (BNGO)
Bionano (NASDAQ:BNGO), which develops and markets top-notch DNA analysis tools, has been left for dead by the Street. Indeed, BNGO stock has a $48 million market capitalization which indicates that most investors expect the firm to go bankrupt.
But Bionano has made meaningful progress towards getting insurers to reimburse the users of its products. If Bionano’s reimbursement is successful, the company’s top and bottom lines should explode, given their product’s superiority at detecting key structural DNA variations.
Two of Bionano’s customers received $1.86 million from the Centers for Medicare and Medicaid Services. They used the product to test for the presence of blood cancers.
Moreover, Bionano CEO Erik Holmlin reported “positive initial feedback” from the FDA about possible approval of a test on the new Stratys system. Prior to approval, the company will have to meet with the FDA and perform a brief clinical study. The study will likely be conducted in the second half of next year.
Progress towards FDA approval could mean a rise in BNGO stock. The rise would likely result in obtaining investor funds that would allow the company to tread water until becoming profitable.
First Solar (FSLR)
Much of the Street believes that solar energy is nearly dead because of high interest rates. However, the adoption of solar by utilities and other large companies has not seen a significant impact.
That’s why First Solar (NASDAQ:FSLR), a solar module retailer, reported great third-quarter results. The company’s revenue jumped 27% YoY to $801 million, while its EPS of $2.50, beat analysts’ $2.04 estimate. Also noteworthy is that the company has a huge “total backlog” of 81.8 gigawatts.
FSLR has three factories in Ohio and is building two more in the U.S., which will benefit American-made solar module tax credits. Further, the company should get a lift from the electricity shortage that Elon Musk has predicted will begin in 2025.
Despite its strong, positive catalysts, FSLR stock has a very low forward price-earnings ratio of just 11.4.
Quanta Services (PWR)
Quanta Services (NYSE:PWR) is well positioned to transition to renewable power thanks to its expertise in constructing electrical power stations, renewable energy infrastructure and natural gas transmission. Moreover, large amounts of money are being spent on the transition to renewable power, providing Quanta with a boost.
PWR reported great Q3 results as its top line jumped 26% YoY to $5.6 billion. On the bottom line, its net income soared to $273.5 million YoY.
Goldman Sachs upgraded PWR to “buy” from “neutral,” citing positive catalysts that are likely to become apparent in the future.
The company’s forward price-earnings ratio of 19.8 is low, given its strong growth trends and positive catalysts. Consequently, it’s one of the best stocks to buy now.
On the date of publication, Larry Ramer did not hold (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.
