There’s no question that some of the best investments you can make are in growth stocks that have been beaten down and offer significant potential to recover.
Often when you find a beaten-down stock, they can provide 100% or maybe even 200% gains as they recover. But to find a business that can be a 10-bagger, you can’t just look for any undervalued company; instead, you have to look for a growth stock.
And when you can find a growth stock that still has the ability to grow rapidly for years but has been beaten down in the short term, the potential for major gains is massive.
Its crucial that whatever issues are impacting the stock can be overcome. And the company should, of course, still be a high-quality business with superior long-term growth potential.
So with that in mind, here are two of the best stocks to buy today with major growth potential.
A beaten-down growth stock to buy now
With climate change continuing to have devastating effects, green energy’s importance is growing by the day. And even the industry itself has multiple sub-sectors, which will all be crucial to cutting down our emissions.
So while green companies that generate power are some of the best renewable energy stocks to buy, an industrial stock like Xebec will also play a crucial role in the industry’s growth.
Xebec designs, manufactures and sells equipment that traps raw gasses and transforms them into renewable natural gas or hydrogen.
By some estimates, just methane from livestock contributes up to 5% of our total greenhouse gases.
Xebec aims to trap these naturally occurring gasses, which not only means that it wouldn’t get into the atmosphere, but we could also transform it and use it as clean energy, making it a win-win situation. This is a technology that’s still early but offers a tonne of potential.
This growth in the industry won’t happen overnight, but with a market cap of just $500 million and plenty of innovation needed over the years to help us tackle climate change, Xebec certainly has the potential to be a 10 bagger.
So if you’re looking for a high-quality growth stock to own for years, I’d strongly consider Xebec while it’s still this cheap.
A top Canadian tech stock
Another industry that has tonnes of high-quality growth stocks is tech. That’s why if you’re looking for a stock with significant growth potential AcuityAds Holdings (TSX:AT)(NASDAQ:ATY) is a perfect choice.
AcuityAds is an AdTech stock with a proprietary platform powered by machine learning that uses Big Data. This is a business that has generated a lot of interest from investors and analysts. Lately, however, AcuityAds’ stock has been beaten down quite severely.
There are two main factors that will help the growth stock to regain momentum in the short run. First will be its business operations which investors see as crucial to its long-term success.
AcuityAds’ highly anticipated illumin platform is why many analysts and investors are most bullish about it. So it will be crucial for the company to rapidly grow sales, especially recurring sales, over the next few months.
Second, especially if the company can make significant strides with its operations, AcuityAds will need to gain some momentum from investors. The AdTech industry was rerated lower earlier this year.
It isn’t just AcuityAds that’s been beaten down, but many top growth stocks in the industry have had similar performances this year.
If AcuityAds can get its operations growing rapidly, it could help bring optimism back to the space, and the stock could see a significant rally as a result.
Of course, with an investment in AcuityAds, we want the stock to rally as soon as possible. But even if it continues to stay rangebound for the time being, it’s still one of the highest potential tech stocks in Canada. Plus, it is considerably cheap at this price.
So if you’re looking for a high-quality growth stock with years of potential, AcuityAds is easily one of the best stocks to buy now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa owns shares of AcuityAds Holdings Inc. and Xebec Adsorption Inc. The Motley Fool owns shares of and recommends AcuityAds Holdings Inc.