10 Undervalued Growth Stocks to Buy Right Now

The article discusses 10 growth stocks that are currently down 10% or more from their highs, despite the S&P 500 reaching new all-time highs. These stocks, including Shopify and Global-E Online, offer investors long-term market-beating potential despite their recent underperformance. The article highlights the potential of these stocks to benefit from the growing e-commerce industry and the increasing prominence of artificial intelligence.

The market has been on a remarkable rebound, with the S&P 500 reaching new all-time highs. However, several promising growth stocks have yet to follow suit, offering investors potential long-term gains despite their recent underperformance. These stocks, which include Shopify and Global-E Online, are trading at least 10% below their highs and present compelling opportunities for investors seeking market-beating returns.

Shopify (NASDAQ: SHOP) has seen its shares drop by 33% from their 2021 peak, but the company's sales have grown significantly, from $4 billion to over $9 billion in the past four years. Shopify's AI-powered tools, such as Shopify Magic and Sidekick, reinforce its mission to simplify entrepreneurship and maintain its position as a leader in the global e-commerce industry. With only 12% market share in the U.S. and less than 2% in international markets, Shopify has decades of growth ahead [1].

Global-E Online (NASDAQ: GLBE) streamlines crossborder sales by offering a comprehensive e-commerce platform that supports sales to over 200 countries. With 30% revenue growth and improving margins, Global-E is well-positioned to benefit from the projected doubling of crossborder sales by 2030. The company's operations are so complex that Shopify has chosen to partner with it rather than build its own international sales platform [1].

DLocal (NASDAQ: DLO) helps merchants sell to customers in foreign countries by offering 900 local payment options in 40 countries. The company's net profit margin has declined from above 30% to 19% since going public, but this trade-off has allowed DLocal to gain a foothold with major customers like Amazon, Spotify, and Uber. Early results show a promising 144% total payment volume (TPV) retention rate, and the company is trading at 23 times earnings while growing TPV by 53% [1].

Nu Holdings (NYSE: NU) has become one of the largest digital banks in the world, serving 99 million active customers across Brazil, Mexico, and Colombia. With a robust 25% net profit margin and impressive growth in average revenue per active customer (ARPAC), Nu Holdings presents a compelling investment case. The company's geographic expansion potential, solid margins, and acceptable delinquency ratios make it a stellar growth stock [1].

Duolingo (NASDAQ: DUOL) has seen its shares decline by 30% since its 2021 IPO, but the company's improving margins and promising growth options could outgrow its current valuation. Duolingo's daily active user (DAU) growth has slowed, but the company has a growth story still in its early chapters, with potential for new courses, standardized tests, and AI use cases [1].

Wingstop (NASDAQ: WING) has seen its shares rally from over $200 to over $300, but the best may still be ahead. The company believes it can raise its store count to 10,000 globally, with 1,955 stores in its development pipeline. Wingstop's 21 consecutive years of same-store sales growth, including a 20% increase in 2024, make it an attractive growth stock despite its current valuation of 69 times cash flow from operations (CFO) [1].

Dutch Bros (NYSE: BROS) is a burgeoning handcrafted-beverage chain with a cult-like following. With over 1,000 shops strong, the company believes it can reach 7,000 locations by expanding into the Midwest and Southeast. Dutch Bros has already reached breakeven on its cash flow from operations, making it a potential compounding machine [1].

UFP Technologies (NASDAQ: UFPT) is a contract development and manufacturing organization for 26 of the 30 largest medical device manufacturers. With its design capabilities and materials expertise, UFP collaborates with medical device makers to create new products. UFP's strategy as a serial acquirer positions it well for future growth, as it handpicks high-margin, single-use products to collaborate on [1].

The Trade Desk (NASDAQ: TTD) is the largest ad-buying platform for the open internet. After reporting earnings that missed expectations, the company's share price was crushed. However, the dramatic sell-off likely had more to do with the company trading at over 100 times its free cash flow (FCF) than with any fundamental issues with the business. With 25% Q1 sales growth and a focus on high-growth areas like connected TV, premium audio, and international markets, The Trade Desk presents a compelling long-term investment case [1].

ASML (NASDAQ: ASML) is a leading lithography company, using ultraviolet light to etch nanoscopic patterns onto silicon wafers. With a market share of over 50% in deep ultraviolet lithography and a monopoly in extreme ultraviolet lithography, ASML is well-positioned to benefit from the growing semiconductor industry. McKinsey & Company expects the industry to grow to $1 trillion by 2030 and surpass $2 trillion by 2040, making ASML an attractive long-term investment [1].

These 10 growth stocks, despite their recent underperformance, present compelling opportunities for investors seeking long-term market-beating returns. The growing e-commerce industry and the increasing prominence of artificial intelligence are likely to drive the performance of these stocks in the coming years.

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/DLO/pressreleases/33459018/10-growth-stocks-down-10-or-more-to-buy-right-now/