Prediction: These three phenomenal stocks will soar

In the last 12 months the S&P 500 rose 35% as investors bought more stocks in anticipation of lower inflation and lower interest rates. But with the benchmark index now hovering near its record high and trading at a historically high forward price-to-earnings (P/E) ratio of 23, some investors may be wary of buying into new stocks.

However, many promising stocks are still trading at discount valuations in this turbulent market. I believe value investors can purchase more shares of Alibaba (BABA -1.63%), Celsius (CELH 6.16%)And Open door (OPEN 1.68%) before the bulls realize their phenomenal growth potential again.

1. Alibaba

Alibaba is the largest e-commerce and cloud services company in China. The company also operates brick-and-mortar stores, logistics services and digital media services. The country was once considered a high-growth leader in China’s economic growth, but has faced tough regulatory, competitive and macroeconomic headwinds in recent years.

In 2021, Chinese antitrust regulators imposed a record fine and tougher restrictions on Alibaba’s e-commerce business, weakening the company’s defenses against strong competitors such as PDD And JD.com. China’s economic downturn, exacerbated by draconian lockdowns during the height of the pandemic, further slowed growth in e-commerce and cloud businesses.

But last year, Alibaba’s growth stabilized and accelerated again. The company was able to offset slower growth in its domestic e-commerce business by expanding its marketplaces abroad. It provided more logistics services to third-party customers and its cloud business grew again as the artificial intelligence (AI) market expanded. China has also recently rolled out new stimulus measures to boost its stagnant economy, and these tailwinds are expected to boost its e-commerce and cloud revenues. That’s why Alibaba shares are up nearly 50% this year – but they remain more than 60% below their all-time high.

From fiscal 2024 to fiscal 2027 (ending in March 2027), analysts expect Alibaba’s revenue to grow at a compound annual growth rate (CAGR) of 8% as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increase at a CAGR of 6%. At just seven times next year’s adjusted EBITDA, the stock looks like a bargain, but its valuations should rise again as investors switch back to China’s best blue-chip stocks.

2. Celsius

Celsius owns the third largest energy drink brand in the US after Red Bull and Monster. By blending natural ingredients such as green tea, ginger, guarana seed extract and amino acids in its sugar-free drinks, the company has carved out its own niche to attract health-conscious consumers. The company also claimed its drinks had “thermogenic properties” that helped people burn more calories.

Celsius experienced a major rebound and growth spurt under John Fieldy, who took over as CEO in 2018. Fieldy pushed the company to rename and repackage its drinks, target health-focused businesses such as gyms and supplement stores, and sell its drinks in the health and beauty sections of traditional supermarkets.

In 2022 PepsiCo (NASDAQ:PEP) acquired an 8.5% stake in Celsius and became its North American distribution partner. Celsius also sold more drinks Amazon and signed a distribution deal with Japan Suntory to sell its drinks in the UK, Ireland and Canada earlier this year.

Celsius shares have fallen more than 40% since the start of the year as investors worried about slowing growth and loss of domestic market share. However, from 2023 to 2026, analysts still expect revenue to grow at a CAGR of 15%, while Adjusted EBITDA increases at a CAGR of 18%. The days of hypergrowth may be over, but things still look cheap at 17 times next year’s adjusted EBITDA. It could rise much further if it maintains its current growth rates and continues to expand into more markets abroad.

3. Open the door

Opendoor operates an online “iBuyer” (instant buyer) platform that streamlines home sales by making instant cash offers on homes, repairing those properties itself, and relisting them for sale on its own marketplace. But this is a capital-intensive business model that requires low interest rates, a healthy real estate market and proprietary AI algorithms to calculate the correct values ​​of the properties purchased.

These challenges caused Zillow And Redfin Opendoor purchased fewer homes as these headwinds intensified, but its adjusted EBITDA margin still fell from positive 0.7% in 2021 to negative 1.1% in 2022 and negative 9% in 2023.

Opendoor’s stock has plunged 90% over the past three years as growth stalled and losses mounted. For 2024, analysts expect a further 26% decline in sales with a negative adjusted EBITDA margin of 3.5%.

However, from 2024 to 2026, they expect revenue to grow at a CAGR of 35% as adjusted EBITDA turns positive in the final year. Based on these expectations, Opendoor looks dirt cheap at less than 1x this year’s revenue. As interest rates continue to fall, the iBuying market is likely to heat up again, drawing more investors back to Opendoor stock.