While I have written quite a few articles lately on shifting some of your gains into defensive stocks and safe dividend stocks, I still think that it is very important to keep some potential multibagger growth stocks in your portfolio. No one truly knows where the market is headed.
We may even see the rally continue. Even if it doesn’t, some of these growth stocks are trading near bargain-basement levels and are unlikely to go down further.
They could end up defying the downtrend altogether and bounce back up significantly. Also, these businesses are at or near profitability and expected to expand their profits significantly going forward. Their earnings growth could organically drive up shares as well.
With that outlook in mind, let’s examine the seven growth stocks that could defy the downtrend.
Direct Digital Holdings (DRCT)
Close up hand holding mobile with Digital Advertising and icons, Digital Marketing concept. digital ad stocks
Source: weedezign via Shutterstock
Direct Digital Holdings (NASDAQ:DRCT) provides advertising technology, data-driven campaign optimization and other solutions. DRCT stock delivered parabolic gains from late October to mid-March as many companies expanded their marketing campaigns and investors became more optimistic about the company’s future.
However, it has come crashing down by 83% since. This is because Direct Digital Holdings missed EPS and revenue estimates for Q4. Also, it posted a weak revenue guidance for 2024. Revenue came in at just $41 million against $66 million expected. And it expects $180 million in revenue for all of 2024 against $242.6 million previously expected by Wall Street.
This seems to be priced in right now. The plunge appears to be moderating, and we could see a recovery soon. Even if the near-term swing doesn’t play out, the long-term prospects seem rosy. And at the $180 million midpoint, we are still looking at 15% year-over-year (YOY) sales growth. EPS at 26 cents this year also means 94% YOY growth, with another 59% growth expected next year to 41 cents. This means you’re just paying 13.5 times forward earnings for the stock. Thus, the decline is overdone from what I can see.
Cheetah Net Supply Chain Service (CTNT)
logistics stocks. supply chain stocks
Source: Travel mania / Shutterstock.com
Cheetah Net Supply Chain Service (NASDAQ:CTNT) offers international trading services to small and medium-sized importers and exporters. The company provides parallel importing, inventory financing and warehousing services. Even with onshoring trends, trade is only going to keep rising. U.S. exports hit a record $263 billion in February. Imports are also rising sharply.
The stock has been rangebound around $1-$2 for quite a while and currently trades just $1.43 as of writing. Analysts expect rapid EPS expansion from 5 cents this year to 16 cents next year. This means you’re paying just 8 times the estimated 2025 earnings. Also, revenue is estimated to bounce back to a record $44.8 million next year.
Moreover, Cheetah Net Supply Chain Service completed the acquisition of Edward Transit Express Group Inc. in February 2024. This California-based carrier specializes in ocean and air transportation services. CTNT is expanding beyond the parallel-import vehicle business. It aims to become an integrated provider of international trade services for small and medium-sized traders. If successful, that transition could lead to huge returns from here.
Integral Ad Science Holding (IAS)
graphic of man using megaphone to talk into giant megaphone towards group of people, conveying idea of advertising
Source: VectorKnight/shutterstock.com
Integral Ad Science Holding (NASDAQ:IAS) provides global media measurement and optimization to advertisers. In simple terms, it helps advertisers with data.
Currently, IAS trades at discounted levels below $10 after plunging 34% year-to-date (YTD). The decline in IAS stock is due to weak revenue guidance for Q1 and the full year 2024, which did not meet analysts’ estimates.
This occurred despite the company beating earnings per share and revenue estimates for Q4 2023. The stock fell 29% on February 28, 2024, following the release of its earnings report for Q4 2023. Plus, there has been significant insider selling in the past three months, and profit margins have decreased compared to the previous year. The company’s profits for 2023 also dipped by 52.9% compared to the previous year.
Regardless, the long-term remains promising here. Most of the bad news is priced in right now. So grabbing it below $10 looks like a good deal since you’re paying just 30 times 2025 estimated EPS and just 9 times estimated 2029 EPS.
Atour Lifestyle Holdings (ATAT)
Woman standing in hotel room with luggage looking at the view. Hotel stocks.
Source: Boyloso / Shutterstock
China’s leading hospitality and lifestyle company Atour Lifestyle Holdings (NASDAQ:ATAT) owns a distinct portfolio of hotel brands. The stock has been more or less flat YTD despite positive growth. It grew its Q4 revenue to $216 million by 137.4% YOY. This beat analysts’ estimates on the top line by 23.7% on the top line, while EPS beat estimates by 10.7%.
Despite this outperformance, Bank of America (NYSE:BAC) cut its price target to $23.7 from $25. This adjustment was due to the company’s guidance for flat YOY revenue per available room (RevPAR) growth for 2024, which failed market expectations of a low single-digit (LSD) increase. However, if the company keeps beating estimates like this, I believe there is room for multibagger gains from here.
Atour Lifestyle Holdings remains committed to its “Chinese Experience, 2,000 Premier Hotels” strategy and aims to operate 2,000 hotels by 2025. Also, ATAT is the first Chinese hotel chain to develop a scenario-based retail business. It designs guest room amenities and works with manufacturers to deliver top-quality products, making it one of the flashiest growth stocks on this list.
Forian (FORA)
Nurse holding a tablet with icons representing different aspects of healthcare and healthcare data representing CANO stock. Healthcare Tech Stocks
Source: metamorworks / Shutterstock
Forian (NASDAQ:FORA) provides software and data solutions to the healthcare industry. This stock has been flat for nearly two years, and I believe there is a good chance it could stage an explosive breakout in the coming months if it meets expectations.
Sadly, that has not been happening. Revenue missed slightly, but EPS surpassed projections by 7 cents and surprisingly came in positive in its Q4 report. However, the stock did not take a big hit as it has already been trading at an established floor and is already quite cheap.
Thus, I believe even with the misses, it is not a bad idea to buy Forian stock in the long run. Analysts expect near breakeven profitability this year and next. Recently, FORA sold its cannabis software unit BioTrack for $30 million in cash. That should improve efficiency going forward and add a big buffer for any unexpected losses. Forian insiders have a vested interest in the company’s growth, as seen by their sizable ownership. This is a more long-term play, but any big contract could send it significantly higher.
Life Time Group (LTH)
The outside of a Life Time Athletic gym in Ontario.
Source: JHVEPhoto / Shutterstock.com
Owning and managing fitness and recreational sports centers, Life Time Group (NYSE:LTH) hasn’t seen any particularly strong price action recently. Yet, the broader trend has been bearish for the past few years. However, I do see light at the end of the tunnel as the business has been doing significantly well and is expected to grow notably in the years ahead.
Analysts expect EPS to grow from 69 cents to $1.11 from 2024 to 2026 along with low double-digit sales growth. The biggest problem is the company’s debt load at $4.3 billion. However, as I have noted in many of my earlier articles, this could actually turn out to be a tailwind for shareholders in the long run once interest rates are cut. The company will have to pay much less in interest expenses once rates come down. So that could boost earnings and thereby lift the stock substantially as well.
Northland started coverage on Life Time Group with an outperform rating on April 23, 2024, citing the company’s “ultimate leisure-focused” offering with a price target of $23. Plus, its 3-year sales growth at 18.5% remains better than 65.6% of its peers. It’s not among the flashiest growth stocks here, but it can still deliver.
Opera (OPRA)
A phone displaying the Opera (OPRA) app
Source: bangoland / Shutterstock.com
Opera (NASDAQ:OPRA) is one of the growth stocks I have written about many times before. I was initially bearish when Opera peaked out around $27.8 per share. But I switched to being bullish as prices more than halved after a plunge last year. Opera has started to slowly recover since. And I believe that OPRA could challenge its former highs in the months ahead as fundamentals seem to have more than caught up.
I’m bullish on Opera mostly because of its Opera GX browser. This browser is tailored specifically towards gaming and has lots of features like Discord, Twitch and AI integration into the side panel. Additionally, it lets gamers cap internet speeds and RAM usage. YouTube and other tabs often hog RAM and take up speed which can cause lag in-game, and Opera’s GX browser easily fixes this problem. It is not a surprise that many Gen Z users have switched from Chrome to Opera GX now. It focuses heavily on the digital market and even cryptocurrencies.
Analysts see solid EPS expansion at around 20% YOY on average in the years ahead, along with revenue growth of around 15% annually on average. So investors pay just 14 times forward earnings. And the best part? The dividend yields 6.1%.
On the date of publication, Omor Ibne Ehsan 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.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
