In this article, we will take a detailed look at the most undervalued growth stocks to buy now.
Growth stocks are companies that grow their revenues and earnings at a faster rate than the overall market does. To identify the true growth stocks, we believe it is important to use a high enough benchmark over a long enough period. In this case, we define growth stocks as companies that managed to achieve a 5-year revenue compounded annual growth rate (CAGR) of at least 20%. It is obvious that all else equal, investors would prefer growth stocks, but the truth is that their high valuations and perceived expensiveness may often make them less attractive. It is not rare that high-growth companies end up underperforming simply because their initially high forward P/E ratio gradually contracts over time, partially or entirely offsetting the contribution of high earnings growth. So, the ultimate grail of investing consists in identifying undervalued growth stocks that would continue to grow rapidly and at the same time maintain or even expand their trading multiple.
READ ALSO: 10 Best Undervalued Stocks to Buy According to Billionaires
The growth factor has underperformed year-to-date as the entire US stock market has retracted by more than 15% since its early 2025 highs. The growth stocks performed worse than the market because capital flows to safety assets such as defensive value stocks and gold; the latter is up more than 30% this year, and its price returns actually exceed those of the entire US stock market over the last 10 years. Such situations are rare, and the truth is, by the time growth stocks become cheap enough, many retail investors are no longer willing to buy. This is exactly what’s happening now, as the CNN Fear & Greed index shows a value of 20/100, showcasing an “Extreme Fear” in the markets. This public fear is amplified by the tariff turmoil, especially as the broader market is showing a “Death Cross” on the technical charts. Similar to Warren Buffett’s teachings to be greedy when others are fearful, we maintain our optimistic stance for the long-term financial and economic health of the US and its stock market.
The emergence of the “Death Cross” signal on the technical chart turns out to be not as scary as perceived by the masses – empirical research shows that the broader market is actually expected to post a positive return of 1% over the 50 days, following the crossing of the 50 daily simple moving average below the 200 daily one, which already occurred on April 11. We don’t claim that history will repeat itself this time; we want to illustrate that this widely discussed and feared event does not have much substance behind it.
Moreover, the US economy remains resilient, all while President Trump removed his foot off the tariff gas pedal and is gradually granting exemptions to key consumer products like electronic devices. Employment data has been one of the most reliable indicators of recessions, and the latest US data shows that March employment did not show any sequential decline compared to February and is only marginally below the 2023-2024 level. Most of the decline compared to 2023-2024 comes from the public sector and only impacted a minority of workers, which is not enough to trigger a widespread economic slowdown.
The US administration is hinting towards a possible agreement between Ukraine and Russia, which could lead to a ceasefire and a gradual return of US businesses to Russia. Such an event would induce a one-time positive shock to the market. Russia represents a giant 150 million consumer market that is significant for many US businesses. Second, the end of the conflict could very likely provide relief for energy prices around the globe, and especially in Europe. Lower energy prices are congruent with more consumer purchasing power and wider business profitability – both these factors should drive corporate earnings and valuations higher.
With that being said, the key takeaway is that markets currently reflect close to peak pessimism, all while the economic situation in the US and around the world isn’t materially worse than it was last year. Such a scenario is highly favorable for growth stocks – not only does the currently depressed market offer more undervalued candidates to invest in, but also hints towards a potential economic acceleration if Russia and Ukraine do reach a deal under the supervision of the US administration. Below, we present the 10 most undervalued growth stocks that may thrive in the following years.
A financial advisor wearing a suit, pointing to a graph demonstrating success and growth in the financial sector.
Our Methodology
To compile our list of most undervalued growth stocks, we used a stock screener to filter for companies that have at least 20% revenue CAGR in the last 5 years, and that trade below 15x forward P/E. Then we compared the list with our proprietary database of hedge funds’ ownership and included in the article the top 10 stocks with the highest number of hedge funds that own the stock as of Q4 2024. The stocks are ranked in descending order of their forward P/E ratio.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Forward P/E ratio: 14.36
Revenue CAGR last 5 years: 33.35%
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor fabless company, specializing in high-performance computing and graphics solutions. The company’s core products represent AMD designs of CPUs such as “Ryzen”, GPUs, and adaptive SoCs, used in cloud infrastructure, personal computing, and gaming, as well as embedded systems. AMD outsources manufacturing operations to foundries like TSMC and GlobalFoundries. The company ranked sixth on our recent list of 12 Best WallStreetBets Stocks To Buy According to Hedge Funds.
Advanced Micro Devices, Inc. (NASDAQ:AMD) delivered record annual revenue in 2024, growing net income by 26% YoY and more than doubling free cash flow from 2023. Fourth quarter revenue increased 24% YoY to a record $7.7 billion, driven by record quarterly data center and client segment revenue. The data center segment contributed roughly 50% of annual revenue as Instinct and EPYC processor adoption expanded significantly with cloud, enterprise, and supercomputing customers. The company successfully established its multibillion-dollar data center AI franchise, delivering greater than $5 billion of data center AI revenue for the year.
Advanced Micro Devices, Inc. (NASDAQ:AMD) expects the demand environment to strengthen across all businesses in 2025, driving strong growth in data center and client businesses and modest increases in gaming and Embedded businesses. The company is well-positioned for ongoing share gains based on having the strongest CPU portfolio in its history and significant design win momentum. AMD believes it is on a steep, long-term growth trajectory, projecting its data center AI franchise to grow from more than $5 billion of revenue in 2024 to tens of billions of dollars of annual revenue over the coming years. The company expects to deliver strong double-digit percentage revenue and EPS growth year-over-year in 2025. Currently trading at only 14.36x forward P/E, AMD is one of the most undervalued stocks on our list.
9. COHR Coherent Corp. (NYSE:COHR)
Forward P/E ratio: 12.65
Revenue CAGR last 5 years: 31.76%
Number of Hedge Fund Holders: 71
Coherent Corp. (NYSE:COHR) is a vertically integrated developer and manufacturer of engineered materials, optoelectronic components, and laser-based systems that are used in industrial manufacturing, communications infrastructure, electronics, and instrumentation. COHR’s most widely sold products are fiber lasers and precision optics, typically used in electric vehicle battery welding, data centers, and advanced sensing in consumer electronics.
Coherent Corp. (NYSE:COHR) delivered strong financial results in Q2 fiscal 2025, with revenue increasing 6% sequentially and 27% YoY to a record $1.43 billion. The company achieved significant gross margin improvement, with non-GAAP gross margin reaching 38.2%, showing strong improvement both sequentially and on a YoY basis. This performance was driven by growth in multiple areas, including strong AI-related datacom transceiver growth, sequential growth in telecom revenue, and growth across multiple key industrial end markets. Besides strong double-digit YoY growth and record revenues, COHR is also trading at a cheap 12.65 forward P/E, making it one of the most undervalued growth stocks to consider.
Coherent Corp. (NYSE:COHR) made substantial progress in strengthening its market position, particularly in the data center and communications market, where Q2 revenue increased 6% sequentially and 58% YoY. COHR continues to expand its technological capabilities, with the company’s indium phosphide production output tripling in the latest Q2, compared to the previous year, enabling rapid growth in 800-gig transceiver products. The company also received its first customer order for its new data center optical circuit switch platform, marking an important expansion of its addressable market.
8. Pinterest, Inc. (NYSE:PINS)
Forward P/E ratio: 11.66
Revenue CAGR last 5 years: 27.50%
Number of Hedge Fund Holders: 73
Pinterest, Inc. (NYSE:PINS) is known for its visual discovery platform with the same name, which enables users to post and explore visual ideas with fashion, home decor, travel, and other themes. The company’s advantage comes from its scale, with monthly active users exceeding 550 million people across the entire world. Similar to other media platforms, PINS generates revenue primarily through advertising. PINS ranked fifth on our recent list of 10 Undervalued Stocks to Invest in According to Goldman Sachs.
Pinterest, Inc. (NYSE:PINS) achieved a transformative year in 2024, as it grew its user base to record levels and delivered over $1 billion in adjusted EBITDA, representing a roughly 50% increase YoY. In the latest reported Q4 2024, PINS achieved its first $1 billion revenue quarter with 18% revenue growth and drove a record number of clicks during the critical holiday season. PINS has managed to grow explosively while at the same time remaining apparently cheap on a forward P/E basis, securing its eighth place on our list of the most undervalued stocks to buy.
Pinterest, Inc. (NYSE:PINS)’s success is driven by strategic initiatives focused on leveraging AI and unique first-party signals to enhance personalization and user experience. The company has transformed its user experience by investing in actionability, relevance, and curation, while distinguishing itself as a positive place online. Looking forward to 2025, PINS plans to continue investing in curation experiences and platform shopability while innovating its lower-funnel tools to help advertisers reach customers with high commercial intent.
7. ConocoPhillips (NYSE:COP)
Forward P/E ratio: 11.38
Revenue CAGR last 5 years: 28.54%
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) focuses on the exploration, production, transportation, and marketing of crude oil, natural gas liquids, and liquefied natural gas. The company has a wide geographic presence across North America, Europe, Asia, and North Africa, making it a significant player in the global energy market, and especially in the US share plays.
ConocoPhillips (NYSE:COP) delivered strong performance in 2024, achieving 4% production growth YoY, exceeding their full-year guidance range. The company demonstrated robust performance across its portfolio with 5% growth in the Lower 48 states and 3% growth in Alaska and international operations, while delivering a 123% preliminary organic reserve replacement ratio. The company closed the Marathon acquisition in late November, which added high-quality, low-cost supply inventory to their portfolio, with expectations to deliver more than $1 billion of run-rate synergies by the end of 2025.
Looking ahead to 2025, ConocoPhillips (NYSE:COP) plans to deliver low single-digit production growth with $12.9 billion of CapEx, while reducing capital spending by over 15% YoY on a pro forma basis. The company announced a target to return $10 billion to shareholders in 2025, consisting of $4 billion in ordinary dividends and $6 billion in buybacks. Additionally, the company expects $3.5 billion incremental cash flow from several new projects once online, leading to approximately $6 billion of total incremental annual free cash flow relative to 2025. With strong guidance ahead and a forward P/E of only 11.38, COP is one of the most undervalued growth stocks to invest in.
6. Royal Caribbean Cruises Ltd. (NYSE:RCL)
Forward P/E ratio: 10.98
Revenue CAGR last 5 years: 88.47%
Number of Hedge Fund Holders: 58
Royal Caribbean Group (NYSE:RCL) is one of the largest global cruise companies, operating more than 67 cruise ships across five brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, serving tourists across the entire world. The company’s strength lies in offering diverse and innovative cruise experiences and onboard amenities, which attract new travelers each year and continuously popularize the cruising holidays format. RCL ranked eighth on our recent list of 10 Best Economic Recovery Stocks to Buy.
Royal Caribbean Group (NYSE:RCL) delivered exceptional Q4 and full year 2024 results, with a record 8.6 million vacations delivered, 11.6% net yield growth, and over $5 billion in operating cash flow. The company achieved its trifecta financial goals 18 months ahead of schedule, returned to investment-grade metrics, and met its double-digit carbon intensity reduction target a year early. The latest Q4 specifically saw revenue yields up 7.3%, earnings per share exceeding guidance by $0.20, and a strong booking position for 2025 in terms of both pricing and volume. Despite strong growth momentum, RCL trades at a forward P/E ratio of only 10.98 and is therefore included among the most undervalued stocks on our list.
Looking ahead to 2025, Royal Caribbean Group (NYSE:RCL) announced significant strategic initiatives, including the launch of Celebrity River Cruises with an initial order of 10 ships starting in 2027, and the ordering of a sixth Edge-class ship for Celebrity Cruises. The company expects 23% earnings growth in 2025, with capacity growing by 5% through new ship introductions and yields projected to grow 2.5% to 4.5%. Booking momentum has been particularly strong as well, with the company reporting its best five booking weeks in history during the latest earnings call.
5. Builders FirstSource, Inc. (NYSE:BLDR)
Forward P/E ratio: 10.64
Revenue CAGR last 5 years: 27.08%
Number of Hedge Fund Holders: 59
Builders FirstSource, Inc. (NYSE:BLDR) is a supplier of building materials and manufactured components to professional homebuilders, remodelers, and commercial contractors in the US. The company’s large scale of operations makes it a key supplier to the construction sector, with the product portfolio including lumber, engineered wood, windows, doors, and roofing, among others. BLDR also provides value-added services such as design, estimating, and installation.
Builders FirstSource, Inc. (NYSE:BLDR) demonstrated resilience in 2024 with strong financial performance, achieving a mid-teens adjusted EBITDA margin and nearly 33% gross margin despite market challenges. The company invested over $75 million in value-added facilities, opened two new truss manufacturing facilities, upgraded 19 truss facilities, and enhanced 13 millwork locations. Digital platform adoption showed progress with $134 million in incremental sales in 2024, and the company expects additional incremental sales of approximately $200 million in 2025. The company also completed 13 acquisitions in 2024 with aggregate prior year sales of roughly $420 million, demonstrating continued execution of its growth strategy.
Looking ahead to 2025, Builders FirstSource, Inc. (NYSE:BLDR) faces headwinds from continued weakness in multifamily construction and affordability challenges in single-family housing. However, the company maintains a strong financial position with a healthy balance sheet, consistently strong cash flow generation, and multiple paths for value creation through organic growth, acquisitions, and share repurchases. Management forecasts net sales between $16.5 billion to $17.5 billion, representing a 4% YoY growth at the middle of the range. BLDR’s ability to grow even during soft construction markets, coupled with an affordable 10.64 forward P/E, makes it one of the most undervalued stocks on our list.
4. The Goldman Sachs Group, Inc. (NYSE:GS)
Forward P/E ratio: 10.15
Revenue CAGR last 5 years: 20.29%
Number of Hedge Fund Holders: 81
The Goldman Sachs Group, Inc. (NYSE:GS) is a systemically important global bank offering investment banking, securities, and asset management services. The company is known for its strong reputation and expertise in advisory services for mergers and acquisitions, underwriting, and trading. Its Asset & Wealth Management division attracts institutions and high net worth individuals through its private banking services.
The operating environment has shifted significantly in the current calendar year, with The Goldman Sachs Group, Inc. (NYSE:GS)’s economists revising US growth expectations down from over 2% to 0.5%, and increased prospects of a recession amid growing signs of slowing economic activity worldwide. Despite these challenges, the firm maintains strong client engagement, with investment banking backlog rising for the fourth consecutive quarter, though execution will depend on market conditions. GS delivered 6% YoY revenue growth and 16% EPS growth, both surpassing the analysts’ consensus. The firm continues to execute on its efficiency initiatives, including adjustments to the pyramid structure and investments in AI solutions to enhance productivity and client service capabilities. GS is a high-growth and long-term outperformer of the market, which only trades at a forward P/E of 10.15, making it one of the most undervalued stocks to buy now.
3. WESCO International, Inc. (NYSE:WCC)
Forward P/E ratio: 9.42
Revenue CAGR last 5 years: 20.49%
Number of Hedge Fund Holders: 62
WESCO International, Inc. (NYSE:WCC) is a distributor of electrical, industrial, and communications products, as well as maintenance, repair, and operations (MRO) supplies. The company’s competitive advantage is based on its global presence and ability to serve a diverse clientele, including commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. WCC ranked 6th on our recent list of 10 Best Economic Recovery Stocks to Buy.
WESCO International, Inc. (NYSE:WCC) returned to sales growth in Q4, driven by over 70% growth in global Data Center business and 20% growth in Broadband business, along with positive momentum in Electrical and Electronics Solutions. For the full year 2024, the company delivered record free cash flow exceeding $1 billion (154% of adjusted net income), while reducing net debt by $431 million. The company also made significant progress on enterprise-wide digitalization efforts and business transformation, with technology and capabilities built more than halfway complete.
Looking ahead to 2025, WESCO International, Inc. (NYSE:WCC) expects organic sales growth of 2.5% to 6.5% with operating margin expansion across all three business units. The company plans to generate $600-800 million in free cash flow and increase its common stock dividend by 10% while continuing share buybacks. Management believes WCC is well-positioned for outsized growth driven by secular trends in AI-driven data centers, increased power generation, electrification, automation, and reshoring, with a strong pipeline of strategic acquisitions aligned with expanding service offerings. With strong guidance ahead and a single-digit forward P/E, WCC ranked third on our list of the most undervalued stocks to consider.
2. Delta Air Lines, Inc. (NYSE:DAL)
Forward P/E ratio: 6.17
Revenue CAGR last 5 years: 20.28%
Number of Hedge Fund Holders: 84
Delta Air Lines, Inc. (NYSE:DAL) is a major US airline operating over 5,400 daily flights to more than 325 destinations worldwide. The company’s operations encompass passenger transport, cargo services, aircraft maintenance, and travel packages. DAL has a strong focus on premium offerings, which allows it to attract more financially potent business travelers.
Delta Air Lines, Inc. (NYSE:DAL) reported revenue growth of 3.3% to a new absolute record for the latest March quarter. The company delivered $1.3 billion in free cash flow and maintained strong operational performance with leading on-time performance among network peers. However, February and March reflected a more challenging macro environment than initially planned, with growth largely stalling due to broad economic uncertainty around global trade.
In response to market conditions, Delta Air Lines, Inc. (NYSE:DAL) is taking decisive actions by keeping second-half capacity growth flat over last year, with domestic main cabin seats declining to align supply with demand. The company continues to see greater resilience in international and diversified revenue streams, including premium and loyalty, reflecting the underlying strength of its core consumer. For the June quarter, DAL expects double-digit operating margins (vs. 5% for the March quarter) and pretax income of $1.5 billion to $2 billion on revenue that is essentially flat to last year. While not providing an updated full-year outlook due to broad macro uncertainty, the company remains well-positioned to deliver solid profitability and meaningful cash flow in 2025. We believe the current forward P/E of 6.17 represents a bargain on an otherwise healthy and high growth company, making DAL one of the most undervalued stocks on our list.
1. United Airlines Holdings, Inc. (NASDAQ:UAL)
Forward P/E ratio: 5.36
Revenue CAGR last 5 years: 20.83%
Number of Hedge Fund Holders: 86
United Airlines Holdings, Inc. (NASDAQ:UAL) is a major US airline serving over 300 destinations across six continents through key hubs like Chicago, Newark, and San Francisco. It is a founding member of the Star Alliance and operates extensive passenger, cargo, and maintenance services. UAL has a strong international presence but lags in premium customer satisfaction rankings.
United Airlines Holdings, Inc. (NASDAQ:UAL) delivered EPS of $0.91 in Q1 2025, with a pretax margin of 3%, marking their strongest first quarter performance in 5 years. Despite a challenging macro environment with softer demand, the company’s revenue increased 5.4% to a record $13.2 billion. The company’s resilience is demonstrated by its expectation to maintain its full-year guidance range of $11.50 to $13.50 EPS if the environment remains stable, while still projecting $7 to $9 EPS even in a recessionary scenario.
United Airlines Holdings, Inc. (NASDAQ:UAL)’s competitive strength is built on its success in winning brand loyal customers, becoming the brand loyal leader in 6 of its 7 hubs. The company’s strategic focus on premium services and international routes has shown resilience, with premium cabin unit revenues up mid-single digits. Looking ahead, UAL maintains a strong liquidity position of $18.3 billion and generated over $2 billion in free cash flow, while reducing net leverage to 2.0x from 2.2x at the end of 2024. The company continues to demonstrate financial discipline through strategic capacity adjustments and cost management, while maintaining its commitment to customer experience improvements, such as Starlink WiFi implementation and club expansions.
Overall UAL ranks first on our list of the most undervalued growth stocks to buy now. While we acknowledge the potential of UAL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than UAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
