3 Undervalued Stocks That Should Be Part of Your New Year’s Shopping List

It is a good time to buy growth stocks such as Cresco Labs, Roku, and AcuityAds at current multiples.

| More on:
stock data

Image source: Getty Images

In the last two months, several growth stocks have lost significant momentum as investors are worried about the steep valuations of companies and the new COVID-19 variant, in addition to rising interest rates. But it also provides you with a golden opportunity to buy quality companies at a cheaper multiple. Here, we take a look at three undervalued growth stocks that should be part of your portfolio in the new year.

Cresco Labs

Valued at a market cap of $2.2 billion, Cresco Labs (CNSX:CL) stock is down 63% from all-time highs. A multi-state cannabis operator, Cresco Labs is one of the largest marijuana producers in the world.

In Q3 of 2021, it reported revenue of US$215.5 million which was an increase of 40.6% year over year. Its adjusted EBITDA stood at US$56.4 million, indicating a margin of 26.2%. While sales were up 2.6% on a sequential basis, adjusted EBITDA soared by 24% compared to Q2 of 2021.

Cresco Labs continues to focus on expansion as it ended Q3 with 37 stores and this number has already risen to 45 at the time of writing. The company generated US$106.2 million in retail sales while net wholesale revenue stood at US$109.3 million in the September quarter.

Analysts expect sales to rise from US$476 million in 2020 to US$1.5 billion in 2022, valuing Cresco Labs stock at a forward price to sales multiple of less than 1.5. Wall Street expects the stock to almost triple in market value in the next 12 months.


Roku (NASDAQ:ROKU) stock is trading 51% below its all-time highs, making it the perfect contrarian bet right now. In the last 12 months, Roku reported sales of US$2.55 billion, an increase of 66% year over year. Its free cash flow also stood at US$266.2 million in the 12 months prior to Q3 of 2021.

Roku stock is valued at a market cap of US$31.4 billion and is forecast to report sales of US$2.8 billion in 2021 and US$3.8 billion in 2022. Its bottom line is also forecast to improve from a loss per share of US$0.14 in 2020 to earnings of US$1.67 per share in 2022. So, the stock is trading at a forward price to 2022 sales multiple of 8.3 and a price to earnings ratio of 138 which might seem expensive but growth stocks command a premium.

Wall Street expects ROKU stock to surge by over 60% in the next 12 months.


The final stock on my list is the Canada based programmatic ads platform AcuityAds (TSX:AT)(NASDAQ:ATY). Down 86% from all-time highs, AcuityAds stock is valued at a market cap of $276 million.

In Q3 of 2021, the company’s sales rose to $27.5 million which was an increase of just 5.4% year over year. After adjusting for currency fluctuations, AcuityAds revenue was up over 11% in Q3. AcuityAds attributed tepid sales to lower ad spending due to supply chain disruptions that impacted its top line.

The key primary driver of revenue growth for AcuityAds is Illumin, an interactive platform that enables clients to create targeted ad campaigns. Sales from Illumin rose by 42% sequentially, accounting for 27% of total revenue.

Analysts expect sales to touch $121.66 million in 2021 and grow by 21.3% to $147.6 million in 2022. AcuityAds stock is trading at a price to sales multiple of less than 2 and a price to earnings ratio of 32.3.

According to Bay Street’s average price target estimates, AcuityAds stock is poised to double in the next 12 months.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns and recommends AcuityAds Holdings Inc. The Motley Fool recommends Cresco Labs Inc. and Roku.

More on Stocks for Beginners

Growth from coins
Stocks for Beginners

3 Incredibly Cheap Canadian Growth Stocks to Buy Today

Canadian growth stocks are cheaper than they have been in a long time. Here are three stocks that are incredible…

Read more »

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

stock data
Stocks for Beginners

2 Reliable Stocks Beginners Can Buy Amid the Market Selloff

As the broader market turmoil continues, new investors can buy these two reliable dividend stocks to get good returns on…

Read more »

Man making notes on graphs and charts
Stocks for Beginners

New Investors: Embrace the Market Downturn and Start Making Serious Side Income

Don't be afraid of the current market downturn. Start researching solid dividend stocks now to make serious side income!

Read more »

Early retirement handwritten in a note
Stocks for Beginners

How This Stock Market Selloff Can Help You Retire Early

The ongoing market crash can massively enhance your potential long-term profits to let you plan your early retirement.

Read more »

consider the options
Stocks for Beginners

Are Stock Buybacks a Positive Sign?

Stock buybacks have become increasingly popular in recent years, but are they always a positive sign for investors?

Read more »

Car, EV, electric vehicle
Stocks for Beginners

Next Tesla? This 1 Canadian EV Stock Just Got More Attractive

BlackBerry’s latest partnership with Magna International makes this already amazing EV stock in Canada even more attractive.

Read more »

worry concern
Stocks for Beginners

Newbie Stock Investors: 3 Rookie Mistakes to Avoid

Newbie investors can ensure financial success in a today’s complex environment by avoiding three rookie mistakes.

Read more »