Many high-growth companies have been trading sideways for months or even years at depressed valuations. But as the old adage goes, the stock market is a weighing machine in the long-run. And right now, I see a prime opportunity to load up on many high-quality stocks trading at bargain-basement prices before they inevitably soar.
With the Federal Reserve potentially about to embark on an interest rate-cutting cycle, these undervalued, but fundamentally-strong, stocks could be prime candidates for a massive rebound rally. Lower rates make riskier investments more attractive. So we may be staring at an inflection point, where the market finally wakes up and re-rates these names higher.
Of course, there are never any guarantees in investing. But with their stocks already trading at rock-bottom levels, the downside risk is limited with these picks, compared to the potential upside. It’s the classic “heads I win, tails I don’t lose much” setup that value investors dream about. Let’s explore these cheap stocks to buy!
Loop Industries (LOOP)
Loop Industries (NASDAQ:LOOP) has developed a proprietary technology that transforms waste PET plastic and polyester fiber into high-purity, virgin-quality PET resin. The company’s solution supports a circular economy by reducing our reliance on fossil fuels and promoting the reuse of plastic waste – a massive environmental problem plaguing our planet.
The growth runway ahead for Loop is immense as countries worldwide race to tighten environmental regulations and meet aggressive climate goals. Just consider the sheer volume of plastic waste generated annually – billions of tons that could potentially be recycled using Loop’s technology. With consumers increasingly demanding sustainable products, brands have a vested interest in incorporating recycled materials into their supply chains.
Now, let’s dive into the company’s financials. Analysts expect Loop’s top-line to explode from a mere $148,000 in fiscal 2024 to a staggering $121.2 million in 2028. Profitability is also on the horizon, with earnings per share forecasted to surge from -45 cents in to 75 cents over the same timeframe. Thus, you’re paying just 4-times 2028 earnings estimates. That valuation seems like a steal to me.
Applied Digital (APLD)
When it comes to Applied Digital (NASDAQ:APLD), most investors immediately think “crypto mining company” and run for the hills. But I believe that knee-jerk reaction is misguided – there’s a lot more to this innovative data center operator than meets the eye.
Sure, a significant portion of Applied Digital’s revenue currently comes from providing blockchain co-location services to crypto miners. But the company is rapidly diversifying into the high-growth realms of high-performance computing (HPC) and artificial intelligence (AI) cloud services. Notably, the company’s next-gen data centers are perfectly-positioned to capitalize on the market’s insatiable demand for computing power.
In the near-term, Applied Digital can benefit heavily from the imminent Bitcoin (BTC-USD) halving event. The mining reward for validating transactions on the Bitcoin blockchain will be cut in half in around two weeks. This means crypto miners will need to essentially double their computing power just to maintain the same output. I can bet that Applied Digital’s data facilities will be running at full capacity as miners scramble to expand their fleets. That means more business for Applied Digital.
The company is guiding for a $500 million revenue run rate and $250 million in annualized adjusted EBITDA by the end of fiscal 2024. I wouldn’t be surprised to see APLD stock deliver multi-bagger returns over the next 12 months or so, given the strength of its catalysts.
Eventbrite (EB)
Eventbrite (NYSE:EB) lets anyone to create, share, find, and attend events that cater to their passions – whether it’s music festivals, marathons, conferences, or community rallies.
Of course, the company took a major hit during the COVID-19 pandemic as live events ground to a halt. But with economies reopening and people’s appetite for experiences surging, Eventbrite could continue to rebound. Wall Street analysts are forecasting double-digit revenue growth in the years ahead as the company regains its footing.
What really catches my eye, though, is the company’s profitability trajectory. Analysts expect Eventbrite to turn the corner to positive earnings in 2026, hauling in 21 cents of earnings per share. This figure could reach $1.20 per share in 2029, if the consensus estimate is hit.
Eventbrite is currently trading at just 5-times those lofty 2029 earnings projections. For a software company with a proven business model and significant operating leverage, that valuation seems like an absolute steal in my view. That’s especially true if Eventbrite can continue driving margin expansion as it scales.
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.