2 Underrated Growth Stocks That Could Double Your Money

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Investing in the stock market right now could set you up for some great returns in the future. The market could certainly continue tanking for the foreseeable future. But it has also recovered from every downturn or recession in history. That’s why buying some promising growth stocks at slashed valuations could be a solid move.  A couple of stocks I’m watching closely that have the potential for significant gains are MariMed (MRMD 1.06%) and Beyond Meat (BYND 6.33%). Here’s why I can see both of these stocks doubling in value.

1. MariMed

Multi-state marijuana producers began trading on the Canadian Securities Exchange recently, a long overdue move, while many other U.S.-based producers both trade on over-the-counter (OTC) markets and on the CSE. Up until a few weeks ago, MariMed was only trading on OTC markets. That’s important, as it means it now reaches a broader pool of investors. And since announcing that it completed its prospectus to trade on the CSE, the stock has been red hot, jumping 60% from where it was at the start of the month (during that time, the Horizons Marijuana Life Sciences ETF has risen a modest 1%).

But I’m not overly bullish that things will change in the short term or that the rally will last, as investors are still down on the cannabis sector as a whole (the Horizons ETF is down 44% year-to-date). However, in the long term, MariMed may be an underrated stock to own. What I like about the company is that it isn’t overly aggressive. MariMed is in six states and has seven operating dispensaries. And it’s in some of the more promising markets, including Illinois, Massachusetts, and Ohio.

By being slow and steady in its approach, it can remain flexible and not be overrun with costs, which leads me to the second reason I like the stock: Its margins are solid. This year the company projects revenue of between $145 million and $150 million, up from $121 million in sales for 2021. And it expects to post an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) profit of $47 million, for a margin of at least 31%. That’s better than the 23% adjusted EBITDA margin Curaleaf Holdings reported in the first three months of this year. Curaleaf is much larger, of course, with over 130 locations across the country and a presence in 22 states.

But remaining lean can work to MariMed’s advantage. Not only can the business conserve cash, but it also makes it a more attractive acquisition target in the future for a larger cannabis company. While growing its revenue can lead to a rising share price and solid gains for MariMed investors, so can an acquisition.

2. Beyond Meat

Another company that I see as a potential acquisition target is Beyond Meat. The business has been struggling mightily, and its shares are down 49% this year. Although it has bounced off its 52-week lows, it is still trading 75% lower than its high of $134.99.

The company’s most recent quarterly results were disappointing — sales of $109.5 million for the period ending April 2 were up just 1.2% year-over-year. It’s possible that the company will do better this year, as a return to normal was still just in its early stages during that period. As people are traveling more and eating out again, demand could start to improve for its products.

Beyond Meat has been launching plant-based chicken products and jerky, and now sells more than just plant-based burgers. That’s why I believe a bigger leap in revenue is overdue. Although there are competitors in this field, Beyond has partnered with multiple big-name restaurant chains, including Pizza Hut, McDonald‘s, and KFC (owned by Yum! Brands).

It’s too early to tell if these moves will pay off or not for Beyond. But with a valuation of just $2 billion, it may not be surprising to see a company just acquire Beyond Meat to diversify into plant-based food products. Beyond Meat is undoubtedly a bit of a risky buy. Still, it’s one that could also double in value, especially if one of its partnerships starts showing promise in generating demand for its products.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

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