Undervalued growth stocks are particularly hard to find because investors are looking for companies that have experienced significant share price growth while trading for a fair valuation and continuing to offer a significant upside. There are stocks out there that fit this criteria — it just takes some digging.
Below, I have selected a few companies that trade as undervalued growth stocks due to their low forward P/E ratio compared to their overall sector average. These companies have also experienced a significant increase in their share price recently.
Costamare (CMRE)
Costamare (NYSE:CMRE) is a marine transportation company that operates dry bulk vessels and containerships. CMRE has a fleet of approximately 105 vessels.
Over the past year, its share price has risen by nearly 95% due to increased revenue growth and positive investor sentiment regarding its impressive liquidity position.
On May 10, CMRE reported earnings for the first quarter of 2024, which stated that total revenue increased by 89% and adjusted net income rose by 62% to $75 million year over year.
Its new ship leasing program has already funded 24 shipping assets totaling $258 million. Compared to the previous year, Costamare has also entered into more than 30 chartering agreements concerning its dry bulk fleet. In Q1 2024, Costamare’s liquidity was approximately $1,060 million, which has interested investors.
It offers a dividend yield of 2.84%. On May 6, it made its most recent quarterly distribution to investors, twelve cents per share.
CMRE has experienced impressive revenue growth lately and is trading at a great valuation. Its forward P/E ratio is 5.56, while the sector average is 18.80. CMRE is a solid place to start for investors seeking strong returns.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) is an industrial REIT that supplies the legally operating cannabis industry with real estate properties for cultivation and retail distribution. It operates in approximately 19 states and has over 100 different properties.
On May 8, IIPR reported earnings for the first quarter of 2024, stating that total revenue decreased slightly by 1% and net income fell by 4% compared to the previous year.
IIPR offers a strong dividend yield partly because it operates as a real estate investment fund (REIT). Its dividend, which is 6.73%, is provided to investors. The quarterly distribution is $1.82 per share on April 15.
Over this past year, its share price has increased by 60% due to its strong earnings potential and its diverse base of tenants.
Innovative Industrial Properties is trading at a fair forward P/E ratio of 18.73, while the sector median forward P/E is approximately 32.53. It still has room to grow, especially as cannabis regulation becomes less restrictive, which could open new opportunities for IIPR in the near term.
Fluor (FLR)
Fluor (NYSE:FLR) is a construction and engineering company that provides project management services for the U.S. military and government, such as nuclear waste, laboratory management and other environmental solutions.
Over the past year, its share price has risen by 63%, partly due to its strong backlog and reported increased flow of contacts.
On May 3, FLR reported earnings for the first quarter of 2024, stating that total revenue remained practically unchanged compared to the previous year. A net loss of $130 million was reported for Q1 2023, which shifted to a net income of $40 million for Q1 2024. The company’s backlog increased by 22% year over year. Its new awards also increased substantially from $3.2 million in Q1 2023 to $7 billion in Q1 2024.
FLR has a reported forward P/E ratio of 15.37, while the sector median is 18.80. With an increase in its backlog and new contracts awarded, FLR is projected to see continued growth even following its impressive recent share price.
As of this writing, Noah Bolton 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.
