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3 Monster Growth Stocks That Are Still Undervalued
Let’s talk about growth. With corona receding, politics growing less exciting, and a new year ahead, investors are getting optimistic – and that means there’s a hunt for stocks that will bring in strong returns. In other words, growth stocks. In a recent interview, Jan Hatzius, chief economist at investment giant Goldman Sachs, said that he sees GDP growth in 2Q21 hitting as high as 10%. In an environment like that, most stocks are going to show a growth trend. Now, we all know that past performance won’t guarantee future results. Still, the best place to start looking for tomorrow’s high-growth stocks is among yesterday’s winners. Bearing this in mind, we set out to find stocks flagged as exciting growth plays by Wall Street. Using TipRanks’ database, we locked in on three analyst-backed names that have already notched impressive gains and boast solid growth narratives for the long-term. Kaleyra (KLR) We will start with Kaleyra, a cloud computing company offering communications solutions. The company’s SaaS platform supports SMS, voice calls, and chatbots – a product with obvious applications and value in today’s office climate, with the strong push to telecommuting and remote work. Kaleyra boasts over 3,500 customers, who make 3 billion voice calls and sent 27 billion text messages in 2019 (the last year with full numbers available). Over the past 6 months, KLR shares have shown tremendous growth, appreciating 155%. Kaleyra’s revenues have grown along with the share value. The company’s 3Q20 results hit $38.3 million, the best since KLR went public. While Kaleyra still runs a net earnings loss each quarter, the Q3 EPS was the lowest such loss in the past four quarters. Maxim analyst Allen Klee is bullish on KLR, seeing recent growth and product offerings as indicative of future performance. “Over the past few years, Kaleyra has posted double-digit revenue growth and positive adjusted EBITDA. We forecast revenue growth of 9%, 22%, and 28% for 2020-2022. We project adjusted EBITDA declines in 2020 to reflect public company costs and COVID-19, but growth at over twice the rate of revenue for the following two years. We expect benefits from operating leverage, low-cost tech employees, cost volume discounts as the company expands, and margin improvement from new offerings and geographies. Over the longer term, we believe the company can grow revenue close to 30% with even faster bottom line growth,” Klee opined. With such growth, it’s no wonder Klee takes a bullish stance on KLR. To kick off his coverage, the analyst published a Buy rating and set a $22 price target. This figure implies a 45% for the coming year. (To watch Klee’s track record, click here) Overall, based on the 3 Buy ratings vs no Holds or Sells assigned in the last three months, Wall Street analysts agree that this ‘Strong Buy’ is a solid bet. It also doesn’t hurt that its $19 average price target implies ~26% upside potential. (See KLR stock analysis on TipRanks) Vista Outdoor (VSTO) Next up, Vista Outdoor, is a venerable company that saw its niche gain attractiveness in recent times. Vista is a sporting goods company, with 40 brands in two main divisions: outdoor products and shooting sports. Vista’s brands include well-known names as Bushnell Golf, CamelBak, and Remington. The company has found a burst of success in the ‘corona year’ as people have turned more and more to outdoor activities that can be practiced solo or in small groups – expanding the customer base. VSTO shares are up as a result, by 214% in the last 12 months. Vista’s earnings reflect the increase in consumer interest in outdoor sports. The company’s EPS grew in 2020, turning from a net loss to a $1.34 per share profit in the fiscal Q2 report (released in November). The fiscal Q3 report, released earlier this month, showed lower earnings, at $1.31 per share, but was still considered solid by the company, as it covered winter months when the company normally sees a revenue decline. Both quarters showed strong year-over-year EPS gains. Covering Vista for B. Riley, 5-star analyst Eric Wold sees several avenues for continued growth by Vista. He is impressed by the growth in firearm and ammunition sales, and by the price increase for products in both the outdoor goods and the shooting sports divisions. “Given our expectation that the increased industry participation numbers for…
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