3 undervalued stocks with strong growth prospects

3 undervalued stocks with strong growth prospects

While the forward-looking sentiment of the stock sector may be moving in a positive direction, there are still opportunities among undervalued stocks with strong growth potential. Certainly, this sector has been characterized by significant returns for technology companies such as Nvidia (Nasdaq:NVDA). However, a smarter approach might be to consider the path less used.

This does not mean that force cannot generate more force. During a period of economic volatility, investors find confidence in companies that have proven themselves. Of course, taking the road less traveled may lead to unforeseen risks, as well as volatility risks. There’s no such thing as a free lunch, especially on Wall Street.

However, investors should at least consider expanding their holdings to include a mix of proven and underappreciated ideas. In this regard, here are undervalued stocks with strong growth potential.

HIMAX Technologies (HIMX)

Himax box shipping label.  Hemex stock.

Source: Mamat Suryadi / Shutterstock

What is it: Specialized in semiconductors, Himax Technologies (Nasdaq:for him) develops and manufactures advanced display driver integrated circuits (ICs) for multiple applications. These cover related sectors such as smartphones, televisions and medical devices. However, it has not achieved the success of its chip manufacturing counterparts. Since the January open, HIMX stock is down 7%.

Relevance: Essentially, Himax is of great importance to the booming HD display manufacturing industry. According to Mordor Intelligence, the 4K display market specifically reached a valuation of $61.48 billion in 2020. By 2026, experts expect the sector to jump to $213.92 billion, representing a compound annual growth rate (CAGR) of 23.1%. .

Positives: Himax achieves a three-year revenue growth rate of 20.8%, higher than 70% of its peers. However, HIMX is trading at just 1.01x sales, below the sector average of 2.87x. Also, analysts rate the stock a Moderate Buy with a price target of $7.50, implying an upside of 27%.

cons: Reliance on the global value chain for chip production presents problems. Himax also operates in a competitive landscape.

Neutrien (NTR)

Image of Nutrien (NTR)'s website, with a magnifying glass above the logo.

Source: Pavel Kapic/ShutterStock.com

What is it: Based in Canada, Nutrients (New York Stock Exchange:NTR) is the largest producer of potash in the world. It is also the third largest producer of nitrogen fertilizers. Given its significant importance to the broader food supply chain, NTR ranks among the most undervalued stocks with strong growth potential. Sure, it has declined significantly this year but the world cannot survive without potash.

Relevance: Clearly, for anyone who understands critical resource supply chains, Nutrien’s importance speaks for itself. But in terms of numbers, Grand View Research indicates that the global potash market reached a value of $57.14 billion last year. Moreover, experts predict that by 2032, the sector will generate revenues worth $93.50 billion. This amounts to a compound annual growth rate of 4.9%. Be patient and put that in the bank.

Positives: Nutrien has a strong three-year revenue growth rate of 28.1% and unsurprisingly steady profitability. However, it trades at a low of 0.9 times earnings the following year, below the sector average of 1.12 times. Analysts also peg the stock as a Buy with a price target of $72.36, implying growth of more than 30%.

cons: Geopolitical factors and economic uncertainty have hit the sector, resulting in NTR incurring a 23% year-to-date loss.

Pro-Dex (PDEX)

Computer view of a building with LEDs written on it

Source: shutterstock

What is it: Headquartered in Irvine, California, Pro Dex (Nasdaq:PDEX) considers itself a product fulfillment company. Specifically, it is a world leader in the manufacture and design of end devices. According to its website, Pro-Dex covers several industries, including medical devices, small air motors, and adaptive torque reduction solutions. However, it is just above nano-cap territory with a market cap of just $58 million.

Relevance: Even though it is a small enterprise, it can pack a serious punch. All you need is to take a bite of the booming industry. Fortunately, according to ResearchAndMarkets, the global contract manufacturing sector reached a value of $246.51 billion last year. Moreover, experts expect this sector to reach $512.74 billion by 2030. If so, the CAGR will reach 9.58% as of 2023.

Positives: Interestingly, Pro-Dex posts a three-year revenue growth rate of 14%, which is higher than the industry average of 7.3x. It also trades at just 1.26 times turnover, below the sector average of 3.49%. Ascendiant’s Edward Wu rates a buy with a price target of $28, anticipating an upside of ~71%. This makes it one of the undervalued stocks with strong growth potential.

cons: In the future, it may face risks that differentiate it from the competition.

On publication date, Josh Enomoto He does not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publication guidelines.

Josh Enomoto, a former senior business analyst at Sony Electronics, has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has provided unique and critical insights to the investment markets, as well as many other industries including legal and business management. Construction and health care. Tweet it at @EnomotoMedia.

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