Investing in discounted stocks for big gains is a time-tested strategy. Although short-term market fluctuations may capture the attention of many, companies with sustainable growth prospects often prove to be the most lucrative investments over time.
Focusing on businesses with competitive advantages, healthy financials and products customers love can position investors to benefit from compounding long-term growth. These companies often have a consistent revenue growth track record and a clear vision for the future.
So, I explored three stocks that possess the characteristics of a promising long-term investment. To identify stocks likely to perform well in the long run, I screened the market for discounted stocks that analysts rate as strong buys. Additionally, I filtered for companies that have showcased 5-year revenue growth rates of over 2,000%.
Last, I only considered companies with more than 50% upside based on analysts’ estimated high target prices and arranged them from lowest to highest.
So, let’s look at these three discounted stocks for big gains.
New Fortress Energy (NFE)
The integrated gas-to-power energy company New Fortress Energy (NASDAQ:NFE) has promising long-term potential, as evident in its 5-YR revenue growth of 2,048.98%. Apart from that, people are expected to utilize energy even in the future.
The company operates through two main segments of Terminals and Infrastructure, and Ships. Terminals and Infrastructure focuses on natural gas procurement, liquefaction and the development of natural gas-fired power generation facilities. The Ship segment offers Floating Storage and Regasification Units and Liquified Natural Gas carriers under long-term arrangements.
New Fortress Energy serves thousands of customers worldwide. It owns various LNG storage, regasification, and power generation facilities in Jamaica, Puerto Rico, Mexico and Miami.
NFE reported fiscal year 2023 results with modest growth. Reported revenue was $2.41 billion. And the company’s net income increased to $548.9 million from $184.79 million.
This growth contributed to the company’s increased total assets of $10.5 billion and analysts’ strong buy rating for the stock. Plus, based on the high target price, the stock has a 60% upside potential. Therefore, it’s not a bad deal for investors looking for discounted stocks for big gains.
Catalyst Pharmaceuticals (CPRX)
Catalyst Pharmaceuticals (NASDAQ:CPRX) is one of the thriving biopharmaceutical companies with the highest revenue growth in the past five years.
The company develops treatments for rare neuromuscular and neurological disorders, primarily focusing on the U.S. market. One of its most popular products is the FIRDAPSE—an amifampridine phosphate tablet used to treat Lambert-Eaton Myasthenic Syndrome.
Moreover, CPRX is developing treatments for MuSK antibody-positive myasthenia gravis and spinal muscular atrophy type 3. Additionally, the company is collaborating with other pharmaceutical companies to expand its product portfolio, contributing to its astonishing 5-year revenue growth rate of 79,540%.
Catalyst Pharmaceuticals reported total revenue in Q4 of 2023 of $110.6 million, a significant 82% from the same period last year. At the same time, net income rose to $34.8 million from $25.5 million, or $0.33 a share (up from $0.24.)
Moving forward, Catalyst Pharmaceuticals expects total revenue of $455-$475 million in fiscal year 2024, driven by FIRDAPSE growth, the launch of AGAMREE in Q1 of 2024, and FYCOMPA sales.
Analysts rate CPRX stock a strong buy, with a 124% potential upside based on high price targets.
Leonardo DRS (DRS)
If one searched for a prominent defense electronics and military support service company with a remarkable revenue growth rate in the past five years, Leonardo DRS (NASDAQ:DRS) would be one of the first companies to come up.
Leonardo DRS operates in two main segments of Advanced Sensing and Computing (ASC) and Integrated Mission Systems (IMS). The ASC segment focuses on developing modern sensing and network computing tech to improve real-time situational awareness for mission executions. Next, the IMS segment specializes in manufacturing power systems, propulsion systems and force protection solutions for U.S. and allied defense customers.
Speaking of modern product development, Leonardo DRS has recently introduced a combat computing product. It is compliant with the U.S. Army’s C4ISR/Electronic Warfare Modular Open Suite of Standards. Additionally, the product is designed to support the U.S. Army’s modernization goals by providing flexibility and interoperability with existing systems.
Q4 of 2023 saw a 13% increase in revenue and a 14% growth in net earnings compared to Q4’23. Leonardo has also grown its revenue by 9,982.05% over the past five years. As for guidance, the company expects revenue of $2.925 billion—$3.025 billion in fiscal year 2024, contributing to analysts’ strong buy rating and 130% estimated upside potential on the high end.
— Rick Orford
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Source: Investor Place