Double Down: 7 Beaten-Down Growth Stocks to Buy Hand Over Fist

Stocks to buy

Many high-flying growth stocks crashed back to earth when the 2021 boom cooled off. Companies that weren’t consistently crushing earnings estimates got caught in the broader market downdraft. But while the overall market has rebounded, not all boats rose on the incoming tide. A handful of stalwarts, dubbed the “Magnificent 7,” have propelled the recovery.

However, I believe several beaten-down growth stocks with staying power are poised to recapture their former glory – and then some.

With up to three potential rate cuts on the horizon this year, we could see a catalyst emerge to reignite many of these beaten-down growth stocks. The gears are already in motion. With this optimistic outlook, here are seven beaten-down growth stocks to consider before they leave the station:

Beaten-Down Growth Stocks: Auo Corporation (AUOTY)

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Auo Corporation (OTCMKTS:AUOTY) provides optoelectronic solutions, which essentially means the company sells displays. There’s no need to explain the megatrend here – almost everyone is glued to their screens these days, whether it’s their phone, TV, computer, or some ad on the street. Screens are only going to proliferate as time goes on.

However, AUOTY’s stock performance hasn’t been stellar over the past few years. The stock went parabolic during 2021’s boom but has since declined over 60% from that peak. I believe Auo Corporation is likely starting to bottom out and poised for a turnaround in the coming months as the financials have been improving. Revenue is expected to grow at 10% this year, and while the company did slip into loss-making territory, it has a solid $2.75 billion cash buffer against $3.95 billion in debt.

As interest rates come down and companies restart their stocking cycles, we could see Auo’s growth restart as well. This restart might take more than just a few quarters, but I believe significant margin expansion is possible here in the long run. The display megatrend isn’t going away, and a well-capitalized player like Auo could be a prime beneficiary as conditions improve.

Airgain (AIRG)

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Airgain (NASDAQ:AIRG) is a very small company, but that also means there’s a good opportunity for investors to realize significant returns if this stock takes off. The company provides wireless connectivity technologies, to the public safety sector (law enforcement, fire department, etc.) among its major customers. I believe there’s significant growth potential ahead, and the stock can deliver big gains – it’s down 80% from its peak but is slowly making a turnaround, already up 218% from its trough.

I believe AIRG can climb much higher as its financials improve. Analysts expect the company to emerge from its loss-making cycle, posting just 6 cents in losses per share in 2024 before hitting profitability next year. Revenue growth is also expected to reaccelerate from 12% this year to 25% in 2024. Moreover, the company has nearly $8 million in cash against just $1.5 million in debt – a relatively clean balance sheet for a small startup.

The stock should appreciate significantly once AIRG hits profitability and starts to expand margins with that 25%-plus top-line growth. You rarely find startups of this size that are profitable and have negligible debt, so AIRG could be a compelling opportunity if it can execute on expectations.

PAR Technology (PAR)

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PAR Technology (NYSE:PAR) is a much bigger company, but it’s also down roughly 53% off its peak. However, I wouldn’t consider this one too beaten down, as it simply returned to its pre-Covid growth trajectory. Still, I believe the stock remains undervalued, as there’s significant growth ahead that Wall Street hasn’t priced in yet.

Analysts expect PAR Technology to nearly break even in 2025 along with annual revenue growth hovering around 10-15% going forward. The company provides omnichannel cloud-based hardware and software solutions, and paying just 3 times forward sales is pretty cheap for any cloud software stock. Once PAR hits profitability and starts to significantly expand those margins, I believe much more upside is in the cards in the years ahead.

As SeekingAlpha contributor Creative Capital Ideas points out, the acquisition of Stuzo allows PAR to capitalize on the fast-growing convenience store segment, while the potential TASK acquisition expands international exposure and TAM opportunities. Recent results show strong performance, with total ARR growing 23% year-over-year and increased adoption across the product portfolio. If PAR can build on this momentum, the stock could have plenty of room to run from current levels.

VerifyMe (VRME)

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VerifyMe (NASDAQ:VRME) is a company that specializes in combating counterfeit and stolen goods using patented invisible inks, bar codes, and tamper-proof labels. Not only does this help customers identify authentic products, but it also protects companies from counterfeiters. You may not have much experience with counterfeit products, but if you shop online often or live in a developing country, they’re everywhere – combating counterfeits is becoming an industry of its own.

VRME is still pretty small, with a market cap of just $13.6 million. It’s still a loss-making company, and the stock’s long-term trajectory isn’t very pretty – you’ll rarely find a small startup with a pristine chart these days. However, the days of significant dilution and cash burn seem to be over. Analysts expect the company to break even in 2026 as losses halve in 2024 and again in 2025. It can then expand margins with double-digit top-line growth. Trading at just 0.5 times forward sales, VRME seems very undervalued right now.

Frontier Group (ULCC)

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Frontier Group (NASDAQ:ULCC) provides low-fare passenger airline services to leisure travelers in the United States and Latin America. You could loosely consider it the Ryanair of the Western Hemisphere, though Frontier’s flights are still pricier than the European ultra-low-cost carrier. Regardless, Frontier’s financials are looking rosy after years of decline – the stock is turning the corner, up 31% year-to-date.

The guidance has been very promising, with expectations for EPS to surge from 48 cents in 2024 to $1.64 in 2026, alongside revenue growth averaging around 15% annually. Yet the stock changes hands at just 4 times 2026 earnings, which makes it very cheap. If those expectations are met, ULCC could easily deliver multibagger returns from here.

The big issue is Frontier’s $3.46 billion debt load against $609 million in cash. Most airline companies are saddled with big debts due to pandemic ripple effects. However, this debt will matter less and could actually boost profitability once rates decline and interest expenses come down. It is one of the best beaten-down growth stocks to buy, in my opinion.

InfuSystem (INFU)

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InfuSystem (NYSEMKT:INFU) is a healthcare stock down almost 60% from its peak. It’s not the usual biopharma play whose fate hinges on FDA approvals, but rather a leading “provider of infusion pumps and related services to hospitals, oncology practices, surgery centers, and other alternate care providers.” An infusion pump delivers fluids like nutrients and medications into patients’ bodies in controlled amounts – the usage of these devices is widespread and increasing.

As such, InfuSystem could see significant margin expansion. Analyst EPS expectations are very positive, with estimates surging from 18 cents in 2024 to 41 cents in 2025 alongside high single-digit revenue growth. INFU’s biomed and wound care businesses are expected to drive growth in 2024. This high revenue growth is lifting the company’s profitability substantially – InfuSystem itself is forecasting continued double-digit growth over the next several years.

PDD Holdings (PDD)

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Most of China’s major e-commerce companies like Alibaba (NYSE:BABA) and JD (NASDAQ:JD) have been sleeping giants lately. Their e-commerce segments are barely growing. Moreover, they’ve had to compromise margins to reignite any meaningful growth in areas like the cloud by slashing prices. Alibaba cut some cloud product costs by 55%. While I believe these big players will likely see a turnaround in the next few years, one company that remains under the radar despite stellar performance is PDD Holdings (NASDAQ:PDD).

PDD’s innovative approach to social shopping sets it apart. Their “Bazaar” format prioritizes conspicuous consumption and discovery feeds over traditional search models. The company operates Pinduoduo inside China and Temu outside China. Temu is the fourth most installed free app on Apple’s App Store. For all of 2023, PDD grew revenue and net income by 90%. Analysts expect almost 50% growth in 2024 and 25% annual revenue growth in the years ahead.

I expect this company to continue growing significantly, along with solid margin expansion. I wouldn’t be surprised if EPS outperforms expectations substantially as it climbs alongside the torrid revenue growth.

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.

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