Market Liquidation: 3 Undervalued Growth Stocks to Buy in May!
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The past few weeks have been extremely turbulent for investors as several tech stocks are lagging off all-time highs. Although it is impossible to predict the bottom of the market, investors can consider buying quality companies at a lower multiple now.
Let’s take a look at three undervalued growth stocks you can add to your watch list this month.
The Lion Electric Company
Valued at $1.3 billion by market cap, The Lion Electric Company (TSX:LEV)(NYSE:LEV) designs, develops, manufactures and distributes medium and heavy-duty electric-powered urban vehicles. Its product portfolio also includes battery systems, bus bodies, truck cabs and chassis. In addition, it distributes truck and bus parts as well as accessories.
The Lion Electric Company increased its sales from US$30.86 million in 2019 to US$57.7 million in 2021. In the first quarter of 2022, it recorded revenue of US$22.6 million, compared to US$6.2 million in the prior year quarter. Its gross loss narrowed to US$0.9 million from a loss of US$1.8 million during this period.
As of May 2022, it had an order book of 2,422 vehicles, which consists of 286 trucks and 2,136 buses representing a total order value of US$600 million. Analysts expect sales to grow 237% to $250.28 million in 2022 and 200% to $750 million in 2023. We can see the stock is valued at five times the forward sales, which is quite acceptable for a high-growth business.
One of the largest marijuana companies in the world, Trulieve Cannabis (CNSX:TRUL) is valued at $3.36 billion, by market cap. It is the largest medical marijuana player in Florida and has 115 dispensaries in the state, giving it a stellar presence and the potential to benefit from the legalization of recreational cannabis in the future.
In 2021, Trulieve acquired Harvest Health, gaining traction in states such as Maryland, Arizona and Pennsylvania. Trulieve too declared income of US$938 million last year, an increase of 80% compared to 2020. In addition, its EBITDA was US$385 million compared to US$260 million in 2020.
Trulieve forecasts revenue of US$1.3-1.4 billion with adjusted EBITDA of US$450-500 million in 2022. Trulieve stock is valued at a price-to-forward multiple of 2.8 , which is very reasonable.
The final grower stock on my list is Skechers (NYSE: SKX), which is valued at a market capitalization of US$5.68 billion. In the first quarter of 2022, its quarterly sales increased 26.8% to US$1.82 billion with adjusted earnings per share of US$0.77, up 22.2% year-on-year. the other. The company’s wholesale revenue soared 32.7% while direct-to-consumer sales increased 15.7% in the March quarter.
Analysts expect sales to grow 16.9% to US$7.35 billion in 2022 and 10.3% to US$8.11 billion in 2023. Comparatively, its adjusted earnings are expected to grow at an annual rate of 72% over the next five years.
Skechers is one of the most undervalued stocks south of the border as it is valued at 0.77 times forwards and 12.6 times forwards. It is also trading at a 40% discount to consensus price target estimates.