Patience can make you more money than any other factor in the market. Of course, the idea is to stay invested in the right stocks. Granted, current macroeconomic conditions are challenging with sluggish GDP growth and inflationary pressure. However, dig deep enough, and you’ll find some of the most undervalued growth stocks with big potential.
Let’s discuss seven undervalued growth stocks to buy and hold for 10x returns by 2030.
Li Auto (LI)
Li Auto (NASDAQ:LI) is among the top, most undervalued growth stocks worth holding until 2030. Once the Chinese markets stabilize and recover, I expect the stock to skyrocket.
One reason to like Li Auto is its strong fundamentals. As of Q3 2023, the Company reported a cash buffer of $12.13 billion. Further, the free cash flow (FCF) for the quarter was $1.8 billion. Considering the growth trajectory, Li could report an FCF of more than $10 billion in the next 12 to 24 months.
For 2024, Li Auto has guided for vehicle deliveries of 800,000. This is an ambitious target with 2023 deliveries at 376,030 vehicles. With the commercial launch of Li MEGA due in March, stellar deliveries growth is likely to be supported.
MINISO Group (MNSO)
MINISO Group (NYSE:MNSO) is another undervalued growth stock poised for multi-bagger returns. The sell-off from the September 2023 highs is a good accumulation opportunity.
As an overview, Miniso is a lifestyle retailer with a global presence. The company differentiates itself through attractive pricing coupled with a dynamic product portfolio. For Q1 2024, Miniso reported revenue growth of 36% on a year-on-year basis to $519.6 million. For the same period, the Company reported a 52.8% year-on-year growth in adjusted EBITDA to $139 million. Healthy revenue growth for Miniso has been associated with EBITDA margin expansion.
It’s worth noting that as of Q1 2024, Miniso reported 6,115 stores globally. On a year-on-year basis, the number of stores increased by 819. Aggressive store expansion in China and overseas will ensure that revenue growth remains robust. It’s worth noting that MNSO stock also offers an attractive dividend yield of 2.53% and I expect healthy dividend growth in the coming years.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is a lithium miner focused on the commercialization of the Thacker Pass asset in the U.S. While the Company is not currently generating revenue, I expect stellar growth once production commences.
Undervalued at current prices, I’d accumulate the stock and hold it for the long-term potential.
To put things into perspective, Lithium Americas commands a market valuation of $670 million. In comparison, the company’s Thacker Pass asset has an after-tax net present value of $5.7 billion. Further, with a mine life of 40 years and an average annual EBITDA potential of $1.1 billion, the asset is a free cash flow machine.
Once lithium trends higher, LAC stock is likely to skyrocket because the project is well-financed for construction. General Motors (NYSE:GM) will be investing $650 million in two tranches and has an offtake agreement for 10 years for lithium from phase one. It’s a matter of holding this potential value creator with patience.
DraftKings (DKNG)
DraftKings (NASDAQ:DKNG) is another one of the top, most undervalued growth stocks with big potential. As more states legalize iGaming and OSB (online sports book), the market potential is likely to swell in the next five years. This puts into perspective the headroom for growth.
Specific to DraftKings, the company was struggling with EBITDA level losses. However, that’s reversed and DraftKings expects adjusted EBITDA of $400 million (mid-point of guidance) for 2024.
The company further expects to boost adjusted EBITDA to $1.4 billion and $2.1 billion by 2026 and 2028 respectively. This guidance does not incorporate potential entry into new states. DraftKings is positioned for healthy growth in a big addressable market.
Amdocs (DOX)
Amdocs (NASDAQ:DOX) has an attractive dividend yield of 2.18%.
The provider of software and services to the telecommunication and media industry globally just reported revenue of $1.25 billion and a 12-month backlog of $4.21 billion. Further, Amdocs has guided for a free cash flow of $750 million for the year. With a strong liquidity buffer ($1.1 billion) and healthy cash flows, Amdocs is positioned to invest aggressively in technology and potential acquisition-driven growth.
An important point to note is that the rising adoption of 5G presents a big market opportunity for Amdocs. By 2025, the Company believes that the serviceable addressable market is likely to be $57 billion. The Company is supporting some of the telecommunication majors for the launch of innovative 5G services and monetization opportunities.
It’s likely that Amdocs will have annual FCF of more than $1 billion in the next 24 months. This will provide ample headroom for shareholder value creation.
Coupang (CPNG)
E-commerce stocks are yet to recover in a post-pandemic era. There are spots of attractive valuation and I believe that Coupang (NYSE:CPNG) is among the growth stocks to buy. CPNG stock has remained sideways in the last 12 months and looks poised for a breakout. My view is underscored by the fact that financial developments remain good.
For Q3 2023, Coupang reported revenue growth of 21% on a year-on-year basis to $6.2 billion. For the same period, the company’s adjusted EBITDA was $239 million. Also, for the trailing 12 months, Coupang reported a free cash flow of $1.9 billion. As FCF accelerates, I expect CPNG stock to trend higher.
Looking at business metrics, Coupang reported 14% year-on-year growth in active customers to 20 million in Q3 2023. Further, the net revenue per active customer increased by 7% on a year-on-year basis. These metrics point to potential expansion in EBITDA margin if ARPU growth sustains.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) could continue to push higher with Bitcoin (BTC-USD).
As an overview, Riot Platforms is a Bitcoin miner with aggressive expansion plans. The first point to note is that Riot has a zero-debt balance sheet. Further, as of Q3 2023, the Company reported cash and digital assets of $599 million. Therefore, there is ample financial flexibility for aggressive investments.
In terms of expansion, Riot reported hash rate capacity of 12.4EH/s towards the end of 2023. The Company expects to increase capacity to 28.8EH/s this year. Further, by the end of 2025, capacity is likely at 38.1EH/s. I must add that if Riot exercises the option to purchase additional MicroBT miners, capacity is likely to increase to 100EH/s in the next few years. If this expansion is associated with new highs in Bitcoin, the Company will be delivering robust free cash flows.
On the date of publication, Faisal Humayun 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.
