3 undervalued stocks with significant growth potential

Despite rising stock market prices and investor concerns about high valuations, there are still companies that offer significant growth potential at an attractive price. At a time when indices like the S&P 500 are reaching record highs, it is important to focus on stocks that can deliver above-average returns over the long term.

In this article, we'll look at three undervalued stocks that analysts believe have significant room to grow and could be an interesting choice for investors.

Alibaba: The giant from China that is growing again

Alibaba $BABA, the largest e-commerce and cloud company in China, has experienced some tough times in recent years. Regulatory crackdowns by the Chinese government, fierce competition, and the economic slowdown caused by the pandemic have negatively impacted its growth. Antitrust fines and restrictions imposed by the Chinese government in 2021 have hit its dominant market position.

However, the situation is gradually stabilising. Alibaba has started to focus more on overseas markets, expanded its third-party logistics services and benefited from the boom in artificial intelligence, which has boosted the growth of its cloud business. In addition, new measures by the Chinese government aimed at stimulating the economy should boost its sales again.

Analysts predict that Alibaba's annual revenue and earnings (EBITDA) will grow by 8% and 6% per year, respectively, from fiscal 2024 to 2027. Despite the stock rising nearly 50% this year, Alibaba shares still remain more than 60% below their all-time high, making it attractive to investors looking for undervalued opportunities.

Celsius: Fast-growing energy drink maker

Celsius, the third-largest energy drink brand in the United States, has found a niche among health-conscious consumers with its sugar-free drinks that contain natural ingredients like green tea, ginger and guarana. The company claims that its products have thermogenic properties, meaning they promote calorie burning.

Under the leadership of John Fieldy, who became CEO in 2018, the company has seen tremendous growth. In 2022, PepsiCo invested in it, allowing it to expand distribution in North America. Although Celsius stock is down more than 40% this year, analysts still expect its revenue to grow 15% annually through 2026.

While Celsius' growth has slowed, the stock remains attractive due to its plans to expand into foreign markets, which may provide further growth and value for investors.

Opendoor: recovery in the real estate sector

Opendoor $OPEN is a pioneer in the market for "iBuyer" platforms that offer instant property buyouts, repairs and resales. However, this model requires low interest rates and a stable real estate market to operate effectively. When interest rates began to rise in 2022, competitors like Zillow and Redfin shut down their "iBuying" services.

Despite these challenges, analysts expect Opendoor's revenue to grow 35% annually from 2024 to 2026, with EBITDA expected to be positive through 2026. As interest rates fall, the real estate market could rebound, bringing growth opportunities back to Opendoor.

Disclaimer: There is a lot of inspiration to be found on Bulios, but stock selection and portfolio construction is entirely up to you, so always do a thorough analysis of your own.

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