Undervalued companies should be a cornerstone of any investment portfolio. They provide safety, especially if you choose a stock that turns out to be unprofitable due to minimized realized losses.
They also allow investors to buy into a company at a favorable rate, and if the company performs well over time, investors who prioritize valuation are highly profitable.
Strong fundamentals help to support a stock’s credibility and valuation. Suppose a company is trading at a fair valuation but may be experiencing a drop in overall revenue or net income. That may be a stock to steer clear of, at least at that present moment. But with solid revenue growth and a fair valuation, it may be worth looking further into that company to see if it’s worth a buy.
Below are a few stocks that fit the criteria of an undervalued stock using forward P/E and reported strong revenue growth for the first quarter of 2024.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) is a regional airline with a fleet of nearly 500 airplanes. It offers passenger and cargo transportation services, as well as aircraft leasing and chartering.
SkyWest has stood out among airline transportation stocks. Companies such as United Airlines (NYSE:UAL), American Airlines (NASDAQ:AAL) and even Delta Air Lines (NYSE:DAL) haven’t come close to SkyWest’s share price of about 130% within this past year.
On April 25, SkyWest reported earnings for the first quarter of 2024, which stated that total revenue increased by 16% year-over-year. In Q1 2023, SKYW reported a net loss of $22 million, which shifted to net income in Q1 2024 to $60 million.
In accordance with its share repurchase program, SKYW bought back approximately $8.7 million in total shares during the first quarter. And it still has considerable cash and marketable securities totaling $821 million.
SkyWest beat analyst expectations on earnings for the first quarter. It is a readily growing airliner expected to continue growing throughout 2024.
Airfares are also becoming cheaper to kick off summer travel, which may also improve SkyWest’s overall ticket sales.
SkyWest is trading at a forward P/E ratio of 29.34.With strong realized revenue growth, which is only anticipated to accelerate, SKYW is a great portfolio addition.
Costamare (CMRE)
Costamare (NYSE:CMRE) is a marine transport company providing containerships and dry bulk vessels.
Its share price has surged recently and has nearly doubled this past year, due to a new ship leasing program and impressive revenue growth.
On May 10, CMRE reported earnings for the first quarter of 2024, stating that total revenue increased by 89% and adjusted net income rose by 62% to $75 million.
Costamare’s liquidity position is $1,106 million, and its first-quarter earnings report exceeded analyst predictions. Its new leasing program has funded approximately 24 shipping assets totaling over $250 million.
It offers investors a solid dividend yield of 2.97% on an annual basis. Its most recent quarterly distribution was 12 cents per share, paid on May 6.
The forward P/E for CMRE is 6.00. It also reported outstanding revenue growth, making it a company that investors should be very interested in.
GigaCloud Technology (GCT)
GigaCloud Technology (NASDAQ:GCT) provides a B2B e-commerce platform that primarily engages in the shipment of large parcel merchandise such as appliances, furniture and fitness equipment.
On May 9, GCT reported earnings for the first quarter of 2024, stating that total revenue nearly doubled to $251 million and net income rose by 71% compared to the previous year. Active buyers and spending per active buyer increased by 29% and 27% in the first quarter, respectively.
For the second quarter of 2024, GCT expects total revenue to be between $265 million and $280 million.
On May 23, GigaCloud sent a press release regarding a recent short-seller report by Grizzly Research LLC. The short report stated that GCT’s website traffic doesn’t support its impressive growth trajectory. Due to the abnormally low website traffic, GigaCloud is performing undisclosed transactions with related parties.
GCT denied these allegations, stating it operates as a B2B company, not a direct-to-consumer business. It has a smaller customer base that buys in volume, so traffic supports this claim.
When the initial short report was released, GCT’s share price dropped. Still, after GCT clarified the situation in its press release, investors sided with GigaCloud and mostly wrote off the short report entirely.
Gigacloud is trading at a P/E ratio 11.71.
GCT’s impressive share price appreciation, which has more than quadrupled in the past year, plus very strong revenue growth, support the idea that it is a strong buy stock that should be on every investor’s watch list.
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.
