Unnoticed Growth Stocks That Wall Street Overlooks, Yet I Find Significant Potential
Most of the time, financial experts and investors on Wall Street generally get it right. They appropriately price stocks based on a company's performance and future prospects. However, occasionally, a stock's price fails to reflect the company's true value. Wall Street may underestimate the organization's potential future growth. Identifying such instances can present a profitable opportunity, as a bullish repricing is inevitable in due time.
Here's a review of three growth stocks that may currently be underestimated by Wall Street, but are unlikely to remain so for much longer. One or all of these could potentially fit well into your investment portfolio.
Opendoor Technologies
It isn't unusual that Opendoor Technologies (OPEN 1.50%) shares have dropped 95% from their early 2021 peak. The real estate listing company went public during a pandemic-ridden 2020, at a time when homebuying was surging, and investors were eager to pay premium prices for compelling story stocks.
After the dust settled and reality set in, both of those trends reversed, becoming headwinds rather than tailwinds. However, the sell-off may have gone too far – at least, according to the analyst community. The present consensus price target of $2.04 per share is only slightly above the stock's current price. Wall Street may be underestimating what lies ahead.
Opendoor is a real estate sales listing platform focusing on individual homeowners, although it also works with real estate agents. Its unique selling point is its ability to make fast cash offers to sellers who aren't keen on waiting for the conventional, time-consuming agent-driven sales process.
This differentiation hasn't been particularly helpful given the U.S.'s home sales slowdown in early 2022. Many homeowners are reluctant to give up their low-interest-rate mortgages, while potential buyers are hesitant to pay the sky-high prices being asked for most houses these days.
However, this situation is cyclical and closely tied to the overall economy. After a projected 26% revenue decline this fiscal year, analysts are forecasting 42% revenue growth in the following year. This growth is expected to continue into the following year, as the company approaches profitability.
There's still significant risk involved, and volatility will be present. The potential reward, however, makes it worth considering.
ASML Holding
You may not be familiar with ASML Holding (ASML -0.65%), but it's quite possible you're benefiting from its technology without even realizing it. This Netherlands-based company manufactures the equipment the semiconductor industry needs to create microchips.
The process is called lithography, or specifically in ASML's case, extreme ultraviolet (or EUV) photolithography. This involves using projected light as a mask or pattern to "spray" circuitry onto silicon, converting it into a functioning microchip.
ASML dominates nearly 90% of the EUV lithography market, which is the only category of lithography devices capable of producing high-performance computer chips. This leading market share is also well-protected by an extensive portfolio of patents.
While not immune to cyclical headwinds, ASML's top line is only projected to grow 4% this year, dragging earnings down alongside it. This reflects the current headwinds adversely impacting the semiconductor industry. Shares have dropped nearly 40% from July's high, returning to their mid-2021 levels.
Once again, the bears might have overreacted. The present price is 27% below analysts' consensus target of $923.58. Most analysts rate ASML stock as a strong buy, possibly anticipating 2025's projected revenue growth recovery at a pace of nearly 19%. Next year's anticipated per-share profit of $27.22 would also set a new record.
Wall Street may not be ignoring this name altogether, but the public at large is mostly unaware of it.
Celsius Holdings
Consider adding energy drink maker Celsius Holdings (CELH -3.33%) to your list of stocks to buy before Wall Street connects the dots. The stock is down 68% from its May peak, but appears poised for a recovery.
Those following the company will likely be aware that its recently released fiscal third-quarter earnings fell short of estimates. Additionally, both revenue and earnings dropped from the previous year. Sales decreased by 31% year over year, and net income plummeted 91%.
However, there's an important caveat to note – all of this can be attributed to changes in the way its distribution partner (and part-owner) PepsiCo obtains and pays for Celsius' products. Retail sales of Celsius' energy drinks within grocery and convenience stores improved 7.1% year over year, according to data from market research firm Circana, signaling the continuation of an established trend.
More positive growth is anticipated in the long run, given how Celsius Holdings differentiates itself from larger competitors such as Red Bull and Monster Beverage. At first glance, it seems like these competitors. However, Celsius Holdings sets itself apart with its focus on wellness and energy through natural ingredients.
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- Emphasis and highlighting in the original text have been retained to maintain the flavor and readability of the source material.
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Peer beneath the surface, and you'll uncover notable variations. One of the most significant distinctions lies in the fact that none of their energy drink concoctions incorporate sugar, corn syrup, synthetic colors, or flavors. The company emphasizes the health benefits of their drinks, claiming they boost metabolism, making them an appealing option for fitness enthusiasts. This health-focused approach is proving successful. Over the past four years, Celsius Holdings' revenue has increased beyond five times its original value. Analysts predict that this revenue growth will persist at a rapid pace for another couple of years.
Celsius shares have experienced a slump in performance over the past few months, yet this isn't an indication of the company's struggles. The decreasing loss rate suggests that more investors are gradually comprehending this fact.
In the context of the given text, here are two sentences that contain the words 'money', 'finance', and 'investing':
- Investors who closely follow the stock market may see potential profit opportunities in companies like Opendoor Technologies and ASML Holding, as Wall Street's current valuation might be underestimating their future financial growth.
- By considering investments in growth stocks such as Celsius Holdings, individuals who are interested in finance and have a long-term investment perspective may find attractive returns, given the company's focus on natural ingredients and increasing revenue trends.
