Some of you out there might agree with me on this point: it has become literally impossible to work out which stage of the cycle the markets are in right now! Is this a late bull market, an early bear market, something in between, or something totally different and uncategorisable due to the lasting impact of Covid? This is not merely an academic question – it affects the buying and selling decisions you and every other investor are making right now.
When the market is sending very confusing signals, and the data doesn’t seem to offer a conclusive judgement about where things are headed, there is one ultimate trust that all investors can return to cheap growth stocks that are always worth buying, regardless of everything else that might be happening!
After all, who doesn't love a bargain? And if you can bag a stock that triples from $1 to $3 a share, or even quintuples from $5 to $25, you can definitely be satisfied with your efforts! Remember, at low valuations, large percentage moves are very, very possible.
With this aim in mind, here we take you through 3 growth stocks with a huge upside potential that look very affordable right now.
- Lightinthebox Holding Company
- Revolution Bars Group
- Elevate Credit
Lightinthebox Holding Company
Lightinthebox may be just about the most exciting small-cap company passed across our desk in quite a while. Lightinthebox is a Chinese e-commerce company specialising in budget fashion, electronics and homeware goods. Needless to say, if Lightinthebox can scale up their operations, then the gigantic and increasingly affluent market they operate in suggests (almost!) unlimited growth potential.
Imagine a kind of mix of IKEA, Primark and Amazon and you could be close to what this small company could become if they play their cards right! Best of all, with the upside potential clear to see, this stock is currently changing hands at bargain-basement prices. The Chinese government's progressive crackdown on their thriving tech sector has seen valuations tumble – now may well be the best time possible to buy into this potential success story.
The ongoing trade tensions between China and the US, as well as Covid disrupting supply chains globally, has also put downwards pressure on the stock price. Lightinthebox may, however, be the classic beaten-down growth stock that mounts a dramatic and spectacular comeback! The company generated $467 million of revenue last year, yet its market capitalization is less than $200 million.
This suggests it is only a matter of time before the market corrects and the value rises again. This is all the more true because Lightinthebox has fat profit margins on its sales, and is overall firmly in positive territory on an earnings per share basis. With shares down almost 40% year to date, Lightinthebox may well be poised for a quick comeback when investors return to Chinese stocks.
Revolution Bars Group
A familiar name to everyone who has ever found themselves on a night out in a UK town centre, Revolution Bars Group look like are a risk well worth taking today. Of course, the whole leisure industry has been demolished over the past 2 years in ways no one would previously have thought possible.
However, the recovery is now well underway, and life has all but returned to normal in many countries. This means that leisure stocks that sank like stones over the last year or so are not looking very, very attractive. Revolution runs around 64 bars across the UK today.
Shares have already surged around 10% since early October, although this remains way below the pre-pandemic high. In short, the business model underlying Revolution Bars Group is simple and timeless, and almost definitely due for a come back soon! Revolution, just like Lightinthebox, looks a lot like a stock with massive growth potential currently resting at a historically low valuation – now could be the time to get in before the post-Covid party carries Revolutions stock even higher!
Finally, no list of beaten-down growth stocks to buy today would be complete without a dynamic fintech upstart in the mix! Elevate Credit is an online-only fintech lender specialising in so-called ‘nonprime’ borrowers. And yes, this would be the same category of borrowers who banks lent too much in the run-up to the 2008 crisis.
However, Elevate have a simple but persuasive proposition: times have changed, and today we are much better armed with tech to help work out which loans are likely to be repaid. Their point is that today with record-high levels of government stimulus and surging wages in many Western countries, conditions are good for lenders.
In a bizarre sort of way, Covid has seen government support for the economy expand to such a large scale that private lending should pick up very rapidly in response to the very extensive macro-economic support made available. Added to this, Elevate argue that they can use AI and data-mining to find a much more accurate picture of which borrowers are able and likely to repay, these keeping loan losses are low, and profits plentiful.
It all sounds very attractive, and if it is even partly correct, then Elevate Credit are set the soar in value over the next few years. The stock is currently trading at just 6 times next year's estimated earnings.
Given the extraordinary valuations floating around in the fintech sector right now, and given the clarity of Elevate’s business proposition, this is one beaten-down growth stock that definitely merits and second look.
eToro - Buy Top Stocks With No Commission
eToro have proven themselves trustworthy within the stock market over many years – we recommend you try them out.
Your capital is at risk. Other fees may apply