High-beta growth stocks have the potential to surprise investors. Exactly a year before, Carvana (NYSE:CVNA) stock was trading at $23.5. The stock has surged by 367% and trades in triple digits. This column focuses on three growth stocks under $20 to buy that are likely to trade above $100 in the next 36 months. Considering the rally in CVNA stock, my upside estimate is conservative.
An important point is that meme stocks have a sharp rally that can follow an equally sharp correction. However, the correction is unlikely to be deep if strong fundamentals and solid business developments back the upside.
Therefore, I have focused on high-beta growth stocks with an attractive growth outlook. Business catalysts will likely ensure these growth stocks remain in a sharp uptrend.
Therefore, the fundamental factors likely to back the massive rally should be discussed.
Li Auto (LI)
Li Auto (NASDAQ:LI) stock has witnessed a sharp correction of 51% year-to-date. This is a golden opportunity to accumulate for multibagger returns in the next few years. It’s worth noting that LI stock trades at a forward P/E of 16. This indicates a valuation gap for this high-growth story.
Earlier this year, Li Auto revised its growth guidance and reiterated its focus on “creating value for our users and driving operating efficiency.” Lowering delivery estimates is one reason for a correction in LI stock. Further, the additional tariffs announced by the European Union on Chinese EVs have impacted sentiments. However, it’s worth noting that Li Auto has an exclusive focus on China.
Regarding positives, Li ended Q1 2024 with a strong cash buffer of $13.7 billion. The vehicle margin during the quarter remained healthy at 19.3%. On the technology and innovation front, Li plans to launch level 3 self-driving technology next year. There are also rumors related to international expansion in the Middle East. As central banks lower interest rates globally, the EV sector is likely to benefit.
Riot Platforms (RIOT)
In the last bull market for Bitcoin (BTC-USD), Riot Platforms (NASDAQ:RIOT) stock traded at highs of $75. Currently, RIOT stock trades at $10.5 and looks massively undervalued at a forward P/E of 15.7. Assuming a meme frenzy and a fresh rally in Bitcoin, RIOT stock will likely deliver multibagger returns quickly.
Although the Bitcoin miner will likely be part of the meme euphoria, Riot has strong fundamentals. The company ended Q1 2024 with a zero-debt balance sheet. Further, Riot had a cash buffer (including digital assets) of $1.3 billion. This provides flexibility for aggressive expansion.
An important note is that Riot ended Q1 with a hash rate capacity of 12.5EH/s. The Bitcoin miner intends to increase capacity to 31.5EH/s by the end of the year. The long-term plan is to boost capacity to 100EH/s by 2027.
Therefore, Riot is poised for multi-fold growth in revenue, EBITDA and cash flows. This is likely to translate into a significant upside in RIOT stock.
Miniso Group (MNSO)
Miniso Group (NYSE:MNSO) is a lifestyle retailer in China, Asia, the United States and Europe. The company offers various lifestyle, home décor and small electronic products, with pricing being a differentiating factor. Additionally, the retailer has a dynamic SKU of product offerings.
MNSO stock has trended higher by 32% in the last 12 months. However, a forward P/E of 16.3 indicates that the stock is undervalued. Miniso offers a dividend yield of 2%, and I expect healthy dividend growth in the next few years.
It’s worth noting that Miniso reported 6,630 stores globally as of March. In the last quarter, the company added 217 stores net. With aggressive store openings, revenue growth has been stellar. At the same time, Miniso has reported an expansion of its EBITDA margin.
The retailer plans to open 900 to 1,100 new stores annually between 2024 and 2028. Therefore, healthy growth is likely to be sustained, and as cash flows swell, there will be more headroom for shareholder value creation.
On the date of publication, Faisal Humayun 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.
