In times of market turbulence, there are often undervalued, high-quality growth stocks to be found, cheap stocks with attractive potential. Omor Ibne Ehsan has selected 3 highly undervalued growth stocks on InvestorPlace, with significant upside potential.
Recession concerns are putting pressure on the share prices of many strong companies. At times, stock prices fell sharply from previous peaks. Many of these companies have robust long-term growth potential. Omor Ibne Ehsan looks for these kinds of undervalued gems, which can bounce back once the air above the market starts to clear. Such a strategy could deliver huge returns to investors in 2024 and beyond.
He looks for companies whose share price is under pressure, even though their foundations are solid. Some of these companies are sitting on piles of cash and waiting for opportunities to grow further. In a turbulent market, patience and care are important qualities. Omor Ibne Ehsan selects the best quality companies with a wide margin between price and intrinsic value. It may take a while for a rebound to occur, but when it does, these are promising stocks.
JinkoSolar – sunny prospects
The solar energy sector has recently faced significant headwinds. This has an impact on the shares of JinkoSolar, despite the fact that the company is running at full speed. This is one of the most undervalued growth stocks on the market right now, according to Omor Ibne Ehsan.
The pressure on the price offers opportunities, because JinkoSolar is traded at a low valuation despite its growth. The company’s forward price-to-earnings ratio is just 2.7%. However, the company’s high debt burden is a risk factor, especially with rising interest rates. But the InvestorPlace analyst thinks leverage concerns are overblown.
In the third quarter of 2023, JinkoSolar’s earnings rose 140.7% year over year to $3.25 per share. Sales grew by 60% to $4.36 billion. Omor Ibne Ehsan thinks that when interest rates eventually fall, investors will value JinkoSolar significantly higher. JinkoSolar’s low valuation offers the prospect of strong returns. Analysts predict a 60% upside potential in a year
Kimball Electronics – sets records, but that is not yet appreciated
Kimball Electronics is another undervalued growth stock. There are also a number of catalysts for this stock that could deliver explosive returns. The company benefits from growth in the automotive, healthcare and industrial sectors, plus geographic production diversification. The stock is a perfect example of a market that is guided by short-term concerns, without regard to the powerful long-term factors.
In the fourth quarter of the fiscal year, Kimball Electronics’ revenue rose 33% year-on-year to a record $496 million. Earnings per share rose 90% to a record high of $0.76. The expectation for the entire financial year is that turnover growth will amount to 4-7%, despite the macroeconomic uncertainties. Since the peak, the stock is down almost 16%, while the company’s fundamentals are healthy.
The share’s price-earnings ratio is a modest 11 times. Profitability offers opportunities to increase shareholder value. This can be done in various ways, such as dividends, share buybacks and mergers and acquisitions. Analysts see an upside potential for the stock of 45% in the coming year.
Pixelworks – pioneer investing in the future
Pixelworks is a pioneer in video processing and digital display technology. But it has not yet managed to capitalize on its pioneering position. When profitability took a hit last quarter, investors shied away. Still, Pixelworks has compelling qualities that could double its stock value in the coming months.
Turnover increased by 37% quarter on quarter in the second quarter of 2023, while it was almost 29% lower on an annual basis. The financial results are under pressure this year. However, the company expects a turnaround in the second half of the year and growth in 2024. Pixelworks trades at just 1.1 times sales. Risks therefore appear to be sufficiently priced in.
The company continues to invest heavily in technology and growth. As future revenue streams increase, profitability should also grow. The $3 price target for the stock implies an upside potential of 152% for the coming year.
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