Identifying undervalued growth stocks to buy presents a compelling opportunity for savvy investors. Often overlooked or misunderstood by the broader market, these companies can potentially deliver outsized returns for investors.
When these stocks are ‘’undervalued,’’ they can offer a unique blend of value and growth. This can potentially create a lucrative investment opportunity for discerning investors who are ahead of the curve. While this can be true, there is no doubt that there is a possibility that you lose money.
Investing in such companies requires meticulous research and proper risk management. Too often, beginners to even the most advanced investors make the mistake of believing they’ve discovered the ‘’next big thing.’’ However, the company often does not have a robust business model and does not have the moat to forecast its earnings per share and cash flows adequately. Before taking risks, always ensure you have a diversified portfolio and only risk what you can afford to potentially lose.
Here are the top three undervalued growth stocks to buy that can double or more by 2028!
United Therapeutics Corporation (UTHR)
United Therapeutics Corporations (NASDAQ:UTHR) is a biotechnology company focused on developing and commercializing innovative therapies for chronic and life-threatening conditions. It has demonstrated remarkable resilience and growth over the last 24 months, making it a standout candidate among undervalued growth stocks.
United Therapeutics’ key growth driver is its strong pipeline of products addressing pulmonary ulterior hypertension (PAH). The company’s flagship product, Orenitram, along with other treatments like Tyvaso and Remodulin, have shown significant efficacy in addressing PAH. Additionally, United Therapeutics is exploring other novel therapies using regenerative medicine and advanced organ manufacturing technologies. Its robust financial performance over the last several years underscored its potential to deliver value to shareholders. In FY23, management delivered record revenue, earnings, and free cash flow.
Moreover, in the first quarter of 2024, its earnings per share increased 27% year-over-year to $6.17 per share. Investors can expect substantial returns as the company continues to advance its pipeline and capture a larger share of the PAH market. This positive backdrop and its strong guidance for FY24 positions the stock to double or more by 2028.
Comfort Systems USA (FIX)
Comfort Systems USA (NYSE:FIX) primarily provides mechanical services, specializing in heating, ventilation, and air conditioning (HVAC) installation, maintenance, and repairs for commercial and industrial buildings. The company operates in a highly fragmented market, offering a significant growth opportunity for discerning investors.
Comfort Systems has been on a tear over the last few years, with the stock significantly outperforming the broader market. FIX stock has risen 502% in the last five years compared to the S&P 500, rising just 85%. This insane growth stems from expanding its revenue, earnings, and free cash flow.
Furthermore, management has remained committed to returning value to shareholders through its recent dividend increases and share buybacks. FIX stock will be a major beneficiary, with construction activity picking up on lower interest rates going into 2025. In the Q1 FY24, revenue increased 31% YOY to $1.54 billion. Net earnings swelled 68% YOY to $96.3 billion while generating $140 million in cash flow from operations. With a record backlog of $5.91 billion, FIX stock is among the top undervalued stocks to buy now.
Sterling Infrastructure (STRL)
Sterling Infrastructure (NASDAQ:STRL) is a leading infrastructure services company that specializes in heavy civil construction, transportation, and e-infrastructure solutions. With the rise of infrastructure investment, Sterling stands as one of the top undervalued growth stocks with substantial upside potential.
One of the key factors driving Sterling Infrastructure’s growth is the significant investment in infrastructure by the U.S. government and private sector. The recently passed infrastructure bill, which allocates billions of dollars for transportation, broadband, water, and energy projects, provides a strong tailwind for the company. Sterling’s expertise in executing complex projects positions it well to benefit from this increase in spending.
Furthermore, the company has a diverse project portfolio and a steadily growing backlog. In the first quarter of 2024, net earnings increased 58% YOY to $31 million. Additionally, its backlog hit a record high of $2.42 billion, with gross margins up 220 basis points to 17.5%. These positive developments make STRL stock an attractive option for long-term investors who are bullish on infrastructure modernization in the United States.
On the date of publication, Terel Miles did not have (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.