But, as I recently broke it down, this memory chip maker has many things working in its favor right now. MU stock is another name that sports a low valuation due to cyclicality. But, with 20%+ earnings growth over the next year, plus its EV tailwinds, the stock at today’s prices (around $57 per share) may have more upside left on the table. Now, it makes sense for this highly cyclical company to sport a low P/E. Trading for around 10.9x forward earnings, GM seems reasonably priced given its potential. Even after its rapid recovery (150.5% rebound) over the past year. And, while it’ll take several years to pay off, the shift to electrification could provide a nice tailwind for GM stock. In short, it’s clear the company has done more to modernize itself beyond just updating its logo. The automotive giant plans to be all-electric by 2035. And, with their incumbent status and existing infrastructure, they’re up for the challenge. Sure, EV pure-plays like Tesla (NASDAQ: TSLA) seem like they have the ability to fully disrupt the old-school automakers.īut, as we’ve seen with Volkswagen’s (OTCMKTS: VWAGY) success with EVs, it’s clear the legacy names aren’t going down without a fight. Source: Formatoriginal / Ī few years back, you could say that legacy automakers like General Motors were at risk of becoming irrelevant as the EV megatrend took off. And, at 21x estimated 2021 earnings (relatively cheap compared to other cloud stocks), there’s minimal risk of multiple contraction. As the underlying trends remain in motion after the pandemic, Dropbox may have the ability to deliver continued solid returns. And, while its projected revenue growth in 2022 (around 9%) pales in comparison to most of its peers, earnings growth next year (13.4%) is more than nice, when you consider its lower valuation.Īdd in its ability to generate free cash flow, and this remains a tech stock even a value investor could love. Yet, it more than makes up for it with its cheap valuation. Sure, as a Seeking Alpha contributor put it on March 16, this isn’t a fast-growing company. Trading sideways for most of last year, the cloud storage play has gained about 38.9% over the past six months.īut, even as the stock market melt-up starts to cool, and investors give this sector and its rich valuations a double-take, DBX stock may be a place you can find growth at a more-than-reasonable price. Yet, with earnings projected to grow nearly 20% in 2022, there’s still room for more gains at current prices (around $46 per share).ĭespite its exposure to the stay-at-home economy trends that boosted tech stocks in 2020, Dropbox stock only recently has started to set the world on fire. Admittedly, given the cyclical nature of the auto parts business, a low price-to-earnings (P/E) ratio is justified. Right now, you can buy BWA stock for just 11.4x forward earnings. Yet, with such a big opportunity on the horizon, and after its 83.4% upward surge since last March, this is far from being priced for perfection. With the company targeting higher-than-expected organic growth thanks to its EV tailwinds, analysts like Morgan Stanley’s Adam Jonas have become more optimistic about its prospects. This indirect exposure to one of the largest megatrends out there will help boost earnings over the next few years. And, it’ll be companies like BorgWarner that will supply them. But, the sudden acceleration in vehicle electrification has played a role as well.Īs more upstart and incumbent automakers move into electric vehicles with full-force, they’re going to need parts. Sure, much of this is due to stocks hard-hit by Covid-19 making a dramatic recovery. So, which cheap stocks stand to see major earnings growth in the next year or two? These seven come to mind as cheap-but-growing opportunities:Īuto parts giant BWA stock is up big from its 52-week lows.
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