Growth stocks have been out of favor in past years, with investors previously fretting over rising interest rates and recession fears. Yes, broader market sentiment has shifted around this issue. But leave out the big caps, and you’ll see most growth stocks remain depressed. Many former highfliers have come back down to earth, leading to some bargains corners of the market. Thus, I believe brighter days are ahead for select growth companies, as the broader climate improves.
The market is solidly bullish right now. With recession concerns easing and the Federal Reserve at or nearing the end of its rate hiking cycle, investors are likely to regain their appetite for growth. However, the big tech giants that led the most recent rally now trade at nosebleed valuations, leaving limited upside for these names. I expect the smart money will rotate into more reasonably-priced opportunities moving forward.
That’s where undiscovered growth stocks with innovative products and rapidly-expanding markets come into play. This sweet spot provides ample runway for future gains, as these overlooked gems graduate to the big leagues.
A row of neon batteries with a lightning bolt symbol on the one in the center; a concept image for energy storage
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Fluence Energy (NASDAQ:FLNC) stands out as a compelling growth play. This company specializes in energy storage solutions and digital applications designed to optimize renewable energy assets.
Now, FLNC stock hasn’t exactly been a star performer lately. The stock is down a staggering 56% from its 2021 peak, continuing to trade with high levels of volatility. However, it’s my view that this volatility has created an enticing entry point for long-term investors willing to look beyond the noise.
From its June 2022 trough to its July 2023 peak, FLNC skyrocketed an incredible 200%, hitting more than $27 per share. The recent slide back to the $15 level is largely attributed to a short seller report released by Blue Orca. But I believe this is a temporary setback. Blue Orca’s report says that Fluence’s parent company is engaged in litigation against Fluence for “…a laundry list of embarrassing and costly engineering and design failures, false representations, and most notably fraud.” However, Fluence has responded with its own report.
In addition, given Europe’s urgent need to wean itself off Russian oil and gas, and subsidies and incentives pouring into clean energy, it’s only a matter of time before companies like Fluence ride the next bullish wave higher.
Currently, FLNC stock trades at a mere 0.66-times forward sales, despite expectations of over 30% annual revenue growth in the coming years. Analysts see FY2024 EPS at 27 cents, climbing to a whopping $2.20 by FY2027 on the back of rapid margin expansion. Even if the company falls short of those lofty targets, the company’s current valuation leaves ample room for upside as its growth story plays out.
UP Fintech Holding (TIGR)
undervalued fintech stocks A concept image of a hand reaching toward the word "Fintech," which is surrounded by icons representing money and growth. Fintech Stock Bargains, fintech stock
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Shifting gears to the world of online brokerage, UP Fintech Holding Limited (NASDAQ:TIGR), better known as Tiger Brokers, is a China-based firm has carved out a niche by catering to international investors through its proprietary mobile and online trading platforms.
Despite its roots, Tiger Brokers derives nearly 90% of its revenue from New Zealand, insulating it from many of the concerns plaguing Chinese tech giants. And while the New Zealand stock market has been relatively flat since the pandemic, I expect a significant recovery as interest rates inevitably come down from their current 5.5% perch.
But that’s not the only reason to be bullish on TIGR stock. This is a stock that has endured an 88% peak-to-trough decline since 2021, yet has been trading sideways below $5 for over two years. To me, that screams “coiled spring,” just waiting for the right catalyst to unleash its pent-up potential. The company is expected to deliver double-digit earnings per share and revenue growth in the years ahead. If UP Fintech can hit its targets, it could be full steam ahead for this under-the-radar growth stock.
FuboTV (FUBO)
FuboTV (FUBO) logo on iPhone display
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Last but not least, let’s turn our attention to the embattled, yet promising, world of live TV streaming with FuboTV (NYSE:FUBO). This stock is down almost 40% year-to-date. However, I believe this recent sell-off has created a rare opportunity to buy into a disruptive growth story at a bargain-basement price.
In Q4, FuboTV exceeded Wall Street’s expectations by a wide margin, reporting an adjusted loss of just 17 cents per share versus the 24-cent loss analysts were bracing for. Revenues clocked in at $410.2 million, outpacing the $398 million consensus. Yet, despite this impressive beat, the stock has plunged to a mere $1.90 per share.
Now, I get it – the streaming space is ultra-competitive, and FuboTV faces no shortage of deep-pocketed rivals. But FuboTV is quietly building a loyal following, ending Q4 with 1.618 million subscribers in North America (up 12% year-over-year).
And the company’s growth runway ahead is hard to ignore. For 2024, FuboTV is guiding for $1.505 billion to $1.525 billion in revenue from its North American streaming segment alone, with another $31 million to $35 million expected from international markets.
But it’s not just about top-line growth. FuboTV is expected to nearly break even in 2025, while maintaining a respectable 15% annual revenue growth rate. In other words, we could be looking at a rare blend of profitability and continued growth, all at a cheap multiple. That’s hard to find in today’s market.
On the date of publication, Omor Ibne Ehsan 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.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
