Investors are always looking for undervalued growth stocks, especially as the economy starts to recover from adversities. This article explores three of the top undervalued growth opportunities to watch. Each company can potentially provide investors with significant value over the long term through sustained growth, innovation, and commitment to customer satisfaction. With its impressive track record of growth, commitment to innovation, and investment in product offerings, the first stock is positioned for long-term financial success and value growth.
Despite its recent setbacks with a vital venture, the second one has a solid financial position and may refocus on its strengths to recover from the losses incurred by the project. Finally, with its vast network and significant market presence in China and beyond, the third stock is poised for long-term financial performance and value growth. Thus, they all bring unique business characteristics and an attractive valuation to the table. Let’s explore their unique strengths and potential for growth.
Undervalued Growth Stocks: Palantir Technologies Inc. (PLTR)
Palantir Technologies (NYSE:PLTR) is on the rise, with tremendous potential for long-term financial growth and success. Recent developments, such as the renewal of its deal with the Australian Transaction Reports and Analysis Centre to support financial crime investigations, being chosen by the Department of State to modernize data management for the Bureau of Medical Services, and announcing a strategic partnership with Cloudflare (NYSE:NET) focused on cloud cost optimization, have demonstrated the company’s ability to attract new clients and expand its reach.
In terms of growth metrics, Palantir is ahead of the game, with a revenue growth rate (forward) of 19.60% that is well above the sector median of 10.96% and an earnings per share long-term growth rate of 62.05%, which is significantly higher than the sector median of 13.50%. The company’s FY2022 business update also has an impressive track record of growth, with the US business growing by 32% YOY to $1.2 billion, revenue growing by 24% YOY to $1.9 billion, and US commercial revenue growing by 67% YOY.
Palantir’s customer count increased by 55% year-over-year to 36p from 237 a year ago. In addition, the company closed 976 deals, up by 61% YOY from 605 a year ago. Again, this showcases Palantir’s ability to support market valuations through sustained growth. Furthermore, Palantir’s recent launch of innovative products at FoundryCon US 2023, including the Process Mining & Automation Suite, Scheduling Primitives, and Foundry Marketplace Developer Suite, further demonstrates the company’s commitment to innovation and investment in its product offerings.
Finally, Palantir’s future looks bright. Its FY2023 guidance shows a continued upward trend, with revenue expected to be between $2.180 billion and $2.230 billion and adjusted income from operations between $481 million and $531 million. Overall, the company’s impressive growth metrics, track record of growth, and commitment to innovation and investment in its product offerings position it for long-term financial success and value growth. Thus, Palantir remains a top, undervalued growth stock to watch.
Meta Platforms, Inc. (META)
Meta Platforms (NASDAQ:META) has been making headlines lately as a top undervalued growth stock. With an earnings per share long-term growth rate of 12.99%, well above the sector median of 9.64%, Meta’s promising growth metrics have caught the attention of investors. However, the company has faced challenges, particularly in its metaverse venture, resulting in a loss of $13.7 billion in 2022.
Meta’s financial highlights show that the company has a solid financial position. However, the company experienced a decrease in revenue in 2022. In addition, Meta’s total costs and expenses increased by 22% and 23% YOY for Q4 and fiscal 2022, respectively. However, these expenses include charges related to their restructuring efforts. At year-end, Meta had $40.74 billion in cash, and a long-term debt of $9.92 billion, highlighting its robust financial health.
Despite the struggles of the Metaverse venture, Meta’s core business remains strong, and the company has the potential to achieve long-term financial performance and value growth. Meta has learned from its mistakes and may refocus on its strengths to recover from the losses. In addition, the company has repurchased billions of dollars worth of stock, demonstrating its confidence in its future growth prospects.
Meta has suffered reputational damage and put billions of dollars of investment at risk due to the metaverse venture. However, the company’s growth metrics, promising innovation in AI, and reasonable valuation provide a compelling growth case for its stock.
Alibaba Group Holding (BABA)
Alibaba Group (NYSE:BABA) is making strategic moves to enhance its decision-making, promote innovation, and respond faster to market changes. The company recently announced a new organizational and governance structure expected to unlock the value of its various businesses and drive long-term financial performance and value growth.
Under the new structure, there will be six major business groups; each managed independently. This will provide greater agility and innovation, allowing each group to raise outside capital and potentially seek its own IPO. However, this does not apply to Taobao Tmall Business Group, which will remain under Alibaba Group.
Additionally, the declining Gross Merchandise Value of Alibaba’s Taobao and Tmall platforms for the quarter was driven by weakening demand in fashion and accessory categories. Notably, value-for-money platforms like Taobao Deals and Taocaicai have enriched product supply and digital consumption experience for price-sensitive consumers.
Despite the company’s challenges, Alibaba remains one of the top undervalued growth stocks. Thus, the company’s new organizational structure and strong position in the sector can unlock shareholder value.
As of this writing, Yiannis Zourmpanos was long PLTR, META, and BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
