7 Deeply Undervalued Growth Stocks to Buy Now

  • These are the undervalued growth stocks to buy for multibagger returns in the long term.
  • Lithium Americas (LAC): Strong EBITDA visibility once assets commence lithium production.
  • Polestar Automotive (PSNY): Strong deliveries growth guidance and pipeline of several new models.
  • ChargePoint Holdings (CHPT): Margins will improve significantly once recurring software revenue swells.
  • Coupang (CPNG): Economies of scale and supply chain optimization will continue to deliver EBITDA margin improvement.
  • Marathon Digital (MARA): Tripling of Bitcoin mining capacity from current levels by June 2023.
  • Transocean (RIG): EBITDA margin expansion on higher day rates and revenue upside visibility from cold stacked rigs.
  • Hecla Mining (HL): Positive free cash flows even as precious metals remain relatively depressed.
growth stocks - 7 Deeply Undervalued Growth Stocks to Buy Now

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Undervalued growth stocks are something all investors should be keeping an eye out for.

Market movement and valuations can be likened to pendulum swings. Rarely do we find the markets at fair valuation. Euphoria and extreme fear are the two extremes. A large part of 2021 was characterized by euphoria for growth and penny stocks.

When the markets faced the reality of over-the-top earnings estimates, growth stocks to a dive. From premium valuations, the scenario has changed to a sea of undervalued growth stocks.

It would again be unrealistic to assume that these undervalued growth stocks will skyrocket anytime soon. The markets continue to face challenges related to inflation, rate hike and GDP growth deceleration. However, several undervalued growth stocks represent companies with a robust long-term outlook.

I am tempted to accumulate these growth stocks with the possibility of manifold returns. Even in the worst-case scenario, these growth stocks would comfortably beat inflation and index returns in the next few years.

Let’s discuss the reasons that make these undervalued growth stocks worth accumulating.

LAC Lithium Americas $25.75
PSNY Polestar Automotive $7.55
CHPT ChargePoint $11.50
CPNG Coupang $19.28
MARA Marathon Digital $6.42
RIG Transocean $4.09
HL Hecla Mining $5.10

Lithium Americas (LAC)

Lithium element on the periodic table. LITM Stock.
Source: tunasalmon / Shutterstock

Lithium Americas (NYSE:LAC) stock looks undervalued after a correction of nearly 17% year-to-date. With quality assets and value-unlocking plans, LAC stock is likely to trend higher in 2023 and beyond.

Lithium Americas recently announced the split of the company into two entities. One will be focused on North America and the other will focus on international lithium assets. This is likely to unlock value in the coming years.

It’s also worth noting that the company’s assets (U.S. and Argentina) have a combined annualized EBITDA potential of approximately $650 million.

The estimates can be higher if the lithium price trend remains bullish. With production likely to commence in 2023, the best part of the rally for LAC stock is still to come.

Polestar Automotive (PSNY)

Close up Polestar logo with electric car in store. Polestar (PSNY) is a Swedish automotive brand owned by Volvo Cars and Geely
Source: Robert Way / Shutterstock.com

It was in October that Polestar Automotive (NASDAQ:PSNY) stock bottomed out at $4. The stock currently trades significantly higher. The rally from oversold levels is likely to sustain as business developments remain positive.

Polestar reported 30,424 vehicle deliveries for the first nine months of 2022. On a year-on-year basis, deliveries have surged by 100%. The company has also reaffirmed its guidance to deliver 50,000 cars in 2022.

In October, the company also launched Polestar 3. Further, three more EVs are in the pipeline for launch through 2026. This is likely to ensure that deliveries growth momentum sustains.

It’s also worth noting that Polestar has a presence in 27 countries globally. With an asset-light model, the company can invest aggressively in innovation and global expansion.

The markets have already discounted the factor of widening operating losses and potential equity dilution. I don’t see cash burn as a concern as Polestar invests in marketing, product development and geographical expansion.

ChargePoint Holdings (CHPT)

CHPT a chargepoint charging station
Source: Michael Vi / Shutterstock.com

Staying with electric vehicles as an investment theme, ChargePoint (NYSE:CHPT) looks undervalued after a meaningful correction. The electric vehicle charging infrastructure segment is likely to see big investments in the U.S. and Europe. ChargePoint seems well-positioned to benefit through the decade.

ChargePoint already has a leadership position in North America and is expanding its presence in Europe. Currently, the company has a presence in 16 European countries.

Rapid expansion has translated into robust revenue growth. For Q2 2023, the company reported year-on-year growth of 93%. With significant penetration impending in EV infrastructure, this growth is likely to sustain in the coming years.

In terms of margin expansion, the following point is important to note – ChargePoint derives revenue from hardware sales and software subscriptions. As the number of charging units sold increases, the recurring subscription revenue will swell. This will have a positive impact on EBITDA margin. I would therefore not be concerned about the cash burn.

Coupang (CPNG)

The Coupang (CPNG stock) campus in Silicon Valley, California.
Source: Michael Vi / Shutterstock.com

Among undervalued growth stocks in the e-commerce sector, Coupang (NYSE:CPNG) is the best bet. At the beginning of the year, the company was struggling with growth concerns and cash burn.

However, there has been a significant improvement in the last few quarters. It’s therefore not surprising that CPNG stock has trended higher by nearly 40% in the last six months. With factors of economies of scale and supply chain optimization, it’s likely that margin improvement will sustain.

Among the positives, Coupang reported 7% growth in active customers on a year-on-year basis for Q3 2022. For the same period, the average revenue per active customer also increased. Coupang believes that there is a significant market to capture within Korea. This will ensure steady active user growth.

With cash and equivalents of $2.9 billion, Coupang is also positioned for expansion. The company has already entered international markets like Japan and Taiwan. This is another catalyst for long-term growth.

Marathon Digital (MARA)

Marathon Oil gas station carport on sunny day with blue sky background
Source: Jonathan Weiss/shutterstock.com

I would invest what I can afford to lose in a stock like Marathon Digital (NASDAQ:MARA). If the company survives the crypto winter and sentiments reverse for Bitcoin (BTC-USD), multi-bagger returns are in the offing.

As of November, the company reported hashing capacity of 7EH/s. Marathon has ambitious growth plans to ramp up capacity to 23EH/s by June 2023. Even after discounting delays, the company is positioned to triple capacity by the end of next year. This will significantly boost digital assets.

Of course, cash burn is likely to sustain in the coming quarters. As of September, Marathon reported $55.3 million in cash and $132.9 million in digital assets. There is financial flexibility to navigate challenging times.

It’s also worth noting that Bitcoin halving is due in 2024. Going by the historical trend, Bitcoin surges after halving. MARA stock is therefore worth holding as a high-risk bet for the next 24 months.

Transocean (RIG)

Transocean logo on a laptop screen. RIG stock.
Source: Postmodern Studio / Shutterstock

In the energy sector, Transocean (NYSE:RIG) looks like an attractive growth stock to consider. With the oil supply likely to remain tight, the offshore drilling rig services provider is poised for acceleration in revenue and EBITDA.

As of Q3 2022, Transocean reported an order backlog of $7.3 billion. The company’s order intake has been improving and new orders are at a higher day rate. This provides visibility for EBITDA margin expansion in 2023.

Further, Transocean still has 12 cold-stacked rigs. If market conditions remain favorable, these rigs will be contracted and provide revenue upside.

Transocean is also targeting debt reduction of $3 billion in the next few years. With a swelling order backlog, this seems likely. Also, as financial flexibility increases, the company will be positioned to expand its fleet. Recently, Transocean acquired an interest in a high-specification ultra-deep-water new build.

It’s worth noting that even with positive business developments, RIG stock has been sideways in the last six months. A breakout on the upside seems imminent.

Hecla Mining (HL)

Macro of silver
Source: Phawat / Shutterstock.com

Hecla Mining (NYSE:HL) looks attractive with the company continuing to report strong quarterly numbers. HL stock has however remained subdued through year-to-date 2022.

For Q3 2022, Hecla reported revenue of $146 million. Even with depressed precious metal prices, Hecla reported positive adjusted EBITDA of $26.5 million. Further, for the first nine months of 2022, the company reported positive free cash flow of $86 million.

It’s also worth noting that Hecla increased its production guidance amidst a challenging environment. Once gold and silver trend higher, the company has ample financial flexibility for inorganic growth. As of Q3 2022, the company reported a total liquidity buffer of $262 million. Hecla has pursued acquisitions in the past to boost production growth.

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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.


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