7 Growth Stocks That Will Outperform the Markets by 2028

When we look at high-quality growth stocks, the revenue and EBITDA upside potential isn’t just for a year or two. In the long term, companies continue to grow at an annual growth rate of 20 to 30%. Of course, industry factors must be supportive and accompanied by good execution. Identifying these long-term growth stocks can lead to massive wealth creation.

This column focuses on growth stocks that represent companies with strong fundamentals and an attractive business. Some of the ideas discussed have been depressed and undervalued due to temporary headwinds. However, there is little doubt about the long-term growth potential.

I would therefore consider exposure to these growth stocks for multi-bagger returns. Over a five-year time horizon, these ideas are expected to see multiple growth in revenue and cash flow. Let’s discuss the business and financial factors that support the bullish thesis.

Miniso Group (MNSO)

Miniso group (NYSE:MNSO) appears to be trading with a large valuation gap given a forward P/E ratio of 15.9. The lifestyle retailer’s sales and profit growth should remain robust and I expect a strong turnaround. It is worth mentioning here that MNSO shares offer an attractive dividend yield of 2%.

An important point is that Miniso has grown rapidly despite macroeconomic headwinds. Since interest rate cuts are expected worldwide in the coming quarters, there is much to suggest that growth will accelerate. For the first quarter of 2024, the lifestyle retailer Sales growth reported up 26% year over year to $515.7 million. Additionally, the adjusted EBITDA margin increased by 200 basis points to 25.9%.

Miniso is also planning an aggressive branch expansion. Between 2024 and 2028 the company will plans to open 900 to 1,100 new stores worldwide. The aim is to achieve sales growth at an annual growth rate of more than 20%. Margin expansion is likely to continue due to operating leverage. Miniso therefore looks attractive in all respects and the stock is likely to be a value creator.

Li Auto (LI)

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If an investor is optimistic about the long-term prospects for electric vehicles, now is the best time to buy EV stocks. Sentiment is too pessimistic and some of the best EV stocks are trading at undervalued levels.

Once sentiment reverses, the upward trend in quality stocks is likely to be steep. Li car (NASDAQ:LI) is among the most undervalued electric vehicle stocks to buy that has the potential to make millionaires. LI stock is trading at a forward P/E ratio of 16.2, following a sharp correction of 50% for the current year.

The slowdown in growth is one reason for the sharp correction. In March, Li announced that the company would focus on “creating value for users and increasing operational efficiency” rather than focusing on sales volume and competition. While this caused pain, it was the right strategy in the long run.

LI stock was also hurt by European Union tariffs on Chinese cars. However, it is worth noting that Li Auto focuses exclusively on China. In addition, the Middle East is the likely market for expansion. Overall, LI stock is a potential multi-bagger with a strong cash buffer, healthy vehicle margin, and a focus on technology.

DraftKings (DKNG)

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DraftKings (NASDAQ:DKNG) The stock has seen a strong rally of 50% in the last 12 months. This was due to margin expansion coupled with presence in a large addressable market. For the same reasons, I expect DKNG stock to continue its upward trend.

As an overview, DraftKings is an online sports betting (OSB) and iGaming provider in the United States. Currently the market (existing states) for OSB and iGaming is $20 billion. It is expected that the The market size will increase increase to $30 billion by 2028. As more states legalize online gambling, the addressable market will continue to swell. I must add that Europe is another large market and DraftKings will likely look to expand outside of the US in the coming years.

A big change for DraftKings over the last 12 months has been the move toward profitability. For the current year, the gambling company has provided one adjusted EBITDA forecast of $500 million. The goal is to achieve EBITDA of $1.4 billion by 2026 and $2.1 billion by 2028. EBITDA could potentially be higher as the company expands into new US states. DraftKings therefore has the potential to become a cash flow machine.

Cronos (CRON)

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The cannabis industry has been expected to grow rapidly for years. However, the biggest headwind to growth has been strict regulations. There appears to be positive sentiment on this front and I am optimistic that quality cannabis stocks will deliver multiple returns.

Kronos (NASDAQ:CRON) is one of the best names in the industry. It’s worth noting that despite strict regulations, Cronos has remained conservative about expansion. This translated into a strong cash buffer of $855 million.

As regulatory headwinds ease, the company appears to be gearing up for aggressive investments. In recent quarters, Cronos has entered new regions in Germany, Australia and the United Kingdom. Given the financial flexibility, it is likely that the cannabis company will continue to expand into new regions.

Recently, Cronos announced that it would provide GrowCo with a secured, non-revolving loan of $51 million (resulting in a 50% equity interest) to finance the facility’s expansion. The aim is to benefit from the global market demand for high-quality cannabis flowers. These initiatives will help accelerate revenue growth and I expect CRON stock to rise.

PACS Group (PACS)

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PACS group (NYSE:PACS) had launched an IPO at $21. The stock gradually rose to $28.6 and remains attractive with a forward P/E ratio of 20x. As an overview, PACS is a provider of skilled nursing and assisted living facilities in the United States. The company currently has 218 facilities in nine states.

The first point to highlight is that PACS Group has sufficient scope to expand its facilities in the US. Aggressive acquisition of new assets is expected in the coming years, which will support revenue growth. Additionally, adjusted EBITDA increased 34% year-over-year in the first quarter of 2024. I expect a sustained increase in EBITDA and possible margin expansion as new assets mature.

In terms of competitive advantage, the company’s skilled nursing facility has one average care costs per day of $550. In comparison, the average cost of care per day in hospitals and inpatient rehabilitation facilities is $2,914 and $1,850, respectively. It is the cost factor that is likely to drive growth and healthy utilization of facilities. With the stock still flying under the radar, it’s a good time to consider getting involved.

First Solar (FSLR)

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First solar (NASDAQ:FSLR) The stock has seen a strong increase of 50% since the beginning of the year. However, this happened after a prolonged period of price and time correction. The FSLR share therefore remains attractively valued with an expected P/E ratio of 19.2x.

As of the first quarter of 2024, First Solar reported a Total booking backlog of 78.3 GW. The backlog extends to 2030 and provides the renewable energy company with clear revenue transparency. In addition, First Solar has a total booking opportunity of 72.8 GW. Even if 50% of potential opportunities turn into a backlog, the growth prospects are bright.

As the order backlog increases, the company also grows to increase production capacity. By the end of 2026, the solar company expects to have solar capacity of 4 GW in the USA and 11 GW internationally. This will result in healthy sales growth as production increases year-over-year. Therefore, with the industry tailwinds and a robust order backlog, First Solar is positioned to create value.

Riot Platforms (RIOT)

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Under Bitcoin (BTC USD) mining stocks, Riot Platforms (NASDAQ:REVOLT) seems like a bargain under $10. If the execution of the growth plans is right, I expect multi-bagger returns from RIOT stock in the next few years. As for valuations, RIOT stock trades at a forward P/E ratio of 13.5. For a high-growth company, the valuation gap is significant.

An important point is that Riot reported a balance sheet with no debt in the first quarter of 2024. Additionally, a $1.3 billion cash buffer (including digital assets) provides high financial flexibility to pursue aggressive growth, and Riot has some big plans.

To put things into perspective, Riot reported a hash rate capacity of 12.5EH/s for the first quarter of 2024. The company plans to increase capacity to 31.5EH/s by the end of the year. Furthermore, the long-term plan The goal is to increase capacity to 100EH/s by 2027. This is likely to translate into a multiple increase in sales and cash flow over the next five years.

At the time of publication, Faisal Humayun did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to those of InvestorPlace.com Publishing Guidelines.