4 High-Growth Stocks That Analysts Think Are Underpriced

Since the Fed signaled to start bond tapering in the near term, U.S. Treasury yields rose sharply. This, along with deepening concerns over inflation, has led to a stock market correction. So, this could be the right opportunity to invest in stocks holding exceptional growth potential at lower price levels.

Investors’ interest in growth stocks is evident from the SPDR S&P 500 Growth ETF’s (SPYG) 15.2% returns over the past six months. This compares to the SPDR S&P 500 Trust ETF’s (SPY) 9.8% returns over this period.

ArcelorMittal (MT), Steel Dynamics, Inc. (STLD), Skechers U.S.A., Inc. (SKX), and Terex Corporation (TEX) possess solid growth attributes, and Wall Street analysts expect these stocks to gain significantly in the near term as they are currently underpriced. So, it could be wise to bet on these stocks now.

ArcelorMittal (MT)

Based in Luxembourg, MT owns and operates steel, iron ore manufacturing, and coal mining facilities worldwide. The company serves the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization and distributors.

On September 28, 2021, MT signed a letter of intent with the Governments of Belgium and Flanders, supporting a €1.1 billion project to build a 2.5 million-tonne direct reduced iron (DRI) plant at its site in Gent, as well as two new electric furnaces. This support from the governments to build DRI and electric furnaces will enable the company to reduce around three million tonnes of CO2 emissions each year.

For its fiscal second quarter ended June 30, 2021, MT’s sales came in at $19.34 billion, representing a 76.2% year-over-year rise. The company’s operating income came in at $4.43 billion, versus a $253 million loss per share in the prior-year period. MT’s adjusted net income came in at $4.01 billion, compared to a net loss of $338 million in the prior-year period. Its EPS came in at $3.46, versus a $0.50 loss per share in the year-ago period. As of June 30, 2021, the company had $4.18 billion in cash and cash equivalents and restricted funds.

Over the past three years, the stock’s tangible book value has grown at a CAGR of 4.3%. MT’s EPS is estimated to rise 1718.2% year-over-year to $12.46 in the current year. It surpassed Street EPS estimates in three of the trailing four quarters. Analysts expect its revenue to be $78.57 billion for the current year, representing a 47.5% year-over-year improvement. The stock’s EPS is expected to grow at a rate of 272.2% per annum over the next five years.

Over the past nine months, the stock has gained 29.5% and ended yesterday’s trading session at $29.75. In terms of forward EV/Sales, MT is currently trading at 0.47x, which is 71.7% lower than the 1.65x industry average. In terms of forward Price/Sales, MT is currently trading at 0.38x, 72.8% lower than the industry average of 1.39x. Wall Street analysts expect the stock to hit $46.57 in the near term, which indicates a potential 56.5% upside.

MT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an A grade for Growth, Value, Sentiment, and Momentum, and a B grade for Quality. Click here to see the additional rating for MT’s Stability.

Of the 33 stocks in the A-rated Steel industry, MT is ranked #6.  

Steel Dynamics, Inc. (STLD)

STDL is a diversified domestic steel producer and metals recycler. The company operates through three segments ─ Steel; Metals Recycling; and Steel Fabrication Operations. It also exports its products that include flat-rolled steel sheets, engineered bar special-bar-quality, and structural beams primarily.

On July 7, 2021, STDL announced its target of a 20% Scope 1 and Scope 2 combined greenhouse gas emissions intensity reduction across its electric arc furnace (EAF) steel mills by 2025 and a 50% reduction by 2030, and increase the use of renewable electrical energy for its EAF steel mills to 10% by 2025 and 30% by 2030. By setting these milestones, the company expects to be carbon neutral by 2050.

STLD’s net sales for its fiscal second quarter ended June 30, 2021, increased 113.2% year-over-year to $4.47 billion. The company’s gross profit came in at $1.20 billion, up 321.8% from the prior-year period. Its operating income came in at $955.74 million for the quarter, representing a 501.6% year-over-year improvement. While its adjusted net income increased 619% year-over-year to $719 million, its adjusted EPS increased 623.4% year-over-year to $3.40. The company had $1.12 billion in cash, cash equivalents, and restricted cash as of June 30, 2021.

The stock’s tangible book value has grown at a CAGR of 12.4% over the past three years. Analysts expect STLD’s EPS to improve 407% year-over-year in the current year to $14.40. The consensus revenue estimate of $17.65 billion for the current year represents an 83.9% rise year-over-year. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect the stock’s EPS to grow at a 32.8% rate per annum over the next five years.

Over the past nine months, the stock has gained 63.7% and ended yesterday’s trading session at $59.55. STLD’s 0.82x forward EV/Sales is 50.3% lower than the 1.65x industry average. In terms of forward Price/Sales, STLD is currently trading at 0.68x, 50.9% lower than the industry average of 1.39x. Analysts’ average price target of $86.25 represents a 44.8% potential upside.

STLD’s POWR Ratings reflect this promising outlook. The stock has an A grade for Growth and Momentum. Click here to see the additional ratings for STLD (Value, Sentiment, Stability, and Quality).

STLD is ranked #27 of 33 stocks in the Steel industry. 

Skechers U.S.A., Inc. (SKX)

SKX designs and markets branded contemporary casual, active, rugged, and lifestyle footwear for men, women, and children worldwide. The company sells its products to department stores, specialty retailers, distributors, and directly to consumers through its retail stores.

Inspired by the late iconic Japanese designer Kansai Yamamoto, SKX launched its limited-edition Skechers x kansaïyamamoto collection of four fashion sneakers for men and women on July 21 in Japan, North America, and Europe. The collection’s distinctive, avant-garde designs are likely to generate good profits in the coming months.

For its fiscal second quarter, ended June 30, 2021, SKX’s adjusted sales increased 113.7% year-over-year to $1.59 billion. The company’s adjusted gross profit came in at $815.90 million, up 118.1% from the prior-year period. Its adjusted earnings from operations have been reported at $189.40 million, compared to a $61.97 million loss in the year-ago period. SKX’s adjusted net earnings were $124.70 million, versus a $74.50 million loss in the prior-year period. Its adjusted EPS came in at $0.80, compared to a $0.48 loss in the year-ago period. As of June 30, 2021, the company had $1.09 billion in cash and cash equivalents.

SKX’s tangible book value has grown at 10.2% CAGR over the past three years. Analysts expect the stock’s EPS to improve 315.4% year-over-year to $2.70 in the current year. The consensus revenue estimate of $6.25 billion for the current year indicates a 36% rise from the prior-year period. SKX surpassed the consensus EPS estimates in three of the trailing four quarters. SKX’s EPS is expected to grow at a 71.6% rate per annum over the next five years.

Over the past nine months, SKX has gained 20.5% and ended yesterday’s trading session at $42.88. In terms of forward EV/Sales, SKX’s 1.18x is 20.3% lower than the 1.47x industry average. In terms of forward Price/Sales, SKX is currently trading at 1.07x, 13.7% lower than the industry average of 1.24x. The average price target of $61.33 represents a potential 43.7% upside.

It’s no surprise that SKX has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Momentum, and a B grade for Growth and Value. Click here to see the additional ratings for SKX’s Stability, Sentiment, and Quality.

The stock is ranked #7 of 36 stocks in the A-rated Athletics & Recreation industry.

Terex Corporation (TEX)

TEX manufactures lifting and material processing products and services worldwide that deliver lifecycle solutions. The company offers lifecycle solutions to construction, manufacturing, transportation, refining, energy, utility, and mining industries. It provides financial products to assist customers in renting, leasing, and acquisition of its products.

TEX’s net sales increased 21.5% year-over-year to $1.04 billion for its fiscal second quarter ended June 30, 2021. The company’s gross profit came in at $231.60 million, up 116.2% from the prior-year period. Its income from operations came in at $122.50 million, representing a 1555.4% year-over-year improvement. TEX’s net income came in at $73.90 million for the quarter, versus a $9.20 million loss in the prior-year period. Its EPS came in at $1.04, compared to a $0.13 loss per share in the prior-year period. The company had $542.20 million in cash and cash equivalents as of June 30, 2021.

TEX’s tangible book value has grown at a CAGR of 4.1% over the past three years. The consensus EPS estimate of $3.03 for the current year represents a 2230.8% year-over-year improvement. TEX’s revenue is estimated to rise 27.1% year-over-year to $3.91 billion in the current year. It surpassed Street EPS estimates in three of the trailing four quarters, which is impressive. TEX’s EPS is expected to grow at a 235.5% rate per annum over the next five years.

The stock has gained 25.4% over the past nine months to close yesterday’s trading session at $43.12. TEX’s 0.88x forward EV/Sales is 53.5% lower than the 1.88x industry average. In terms of forward Price/Sales, TEX is currently trading at 0.77x, 49.6% lower than the industry average of 1.53x. Wall Street analysts expect TEX to hit $58.56 in the near term, which indicates a potential 35.8% upside.

TEX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has an A grade for Growth and Value. Click here to see the additional ratings for TEX’s Quality, Momentum, Stability, and Sentiment.

TEX is ranked #19 of 55 stocks in the B-rated Industrial - Building Materials industry. 

MT shares were trading at $30.36 per share on Thursday afternoon, up $0.61 (+2.05%). Year-to-date, MT has gained 33.63%, versus a 16.89% rise in the benchmark S&P 500 index during the same period.

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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