If you’ve been looking to increase your portfolio’s exposure to the “green wave,” or the global move towards renewable energy and environmentally sustainable practices, Flexible Solutions International (NYSEAMERICAN:FSI) stock may be one to add to your watchlist.

Sure, FSI stock is very obscure, compared to other names benefitting from this trend.

Even so, I wouldn’t hold this obscurity against it, as it may in fact work to your advantage. Why? Most high-profile “green wave” stocks trade at rich valuation.

They either trade at a high multiple of current results, or at present unprofitable, and are valued primarily on (possible) future growth.

With FSI, however, you get the best of both worlds. This company offers strong growth potential at an arguably “deep value” price. This may sound too good to be true, but taking a closer look, it’s clear this green stock is the real deal.

FSI Stock at a Glance

Headquartered in Canada, Flexible Solutions International operates around the world, including in the United States. The company is primarily a provider of biodegradable polymers, for industrial and agricultural applications.

Thanks to the strength of this chief business, FSI has reported vigorous growth in recent years. From 2018 to 2022, annual revenue went from $17.8 million, to $45.8 million. Earnings have increased at an even higher rate.

Over this time frame, net income has grown nearly threefold, from $2.5 million to $7 million.

Admittedly, 2022 was a banner year for Flexible Solutions. Successfully in passing along rising input prices for its products, the company was able to report earnings growth in tandem with revenue growth. This has changed, though, in recent quarters. Revenue has dipped, as have margins.

As a result, analyst forecasts call for earnings to come in at only 40 cents per share this year, compared to the 56 cents per share in earnings reported last year.

Yet while this may explain why you can buy FSI stock today for only 7.3 times earnings, I wouldn’t jump to the conclusion that this is a former growth stock morphing into a value trap.

Why a Growth Renewal is Possible

FSI’s operating results may take a breather this year, but some signs point to this not being a permanent trend. For one, analysts expect Flexible Solutions to report much stronger fiscal results in 2024 than in 2023.

Per their forecasts, the company will have revenue of around $54.9 million next year (representing around a 12% increase), as well as earnings of 54 cents per share (representing a 35% increase).

Although improved results with its primary business may be what drives this, don’t rule out something else playing a role in this potential growth renewal.

By now, you may wonder why exactly FSI stock is a “green wave” play. It sounds more like a chemical company so far, right?

Well, besides the fact its main product lines are used in sustainable water use practices, Flexible Solutions also has a line of products that have yet to really reach the commercialization stage.

During 2022, FSI generated just a little over 1% of its overall revenue from its water evaporation control products like HeatSavr  and WaterSavr. However, given the growing push to further improve water use policies, a materially higher level of demand for these products could soon arrive.

Bottom Line

It is far from guaranteed that big improvements are just around the corner for Flexible Solutions. Sell-side forecasts are not the same as actual results.

The company last month released preliminary revenue data for the preceding quarter. However, full results and updates to guidance will not arrive until next week (August 14). Once the full financials are released, we will have a stronger idea of where things stand with FSI, especially when it comes to HeatSavr/WaterSavr commercialization efforts.

That said, with its low valuation, plus a strong pathway back into high-growth mode, I would at the very least add FSI stock to your watchlist. Although risky and under-the-radar, if it successfully capitalizes on green trends, FSI stock could really take off in price over time.

FSI stock earns a B rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.