7 Growth Stocks That Trade at Attractive Valuations

7 Growth Stocks That Trade at Attractive Valuations

Since the beginning of 2022, the S&P 500 index has corrected by 10%, but some growth stocks have witnessed a much sharper correction. This isn’t much of a surprise with so many headwinds. Trom concerns related to a possible rate hike to geo-political tensions, people are avoiding risk where they can.

Growth stocks generally trade at a valuation premium, but their valuation premium erodes once market sentiment turns negative.

However, this seems like a good time to gradually accumulate some growth stocks. There might be a case for a delayed rate hike with an uncertain economic environment. This can be a possible catalyst for renewed market upside once geo-political tensions de-escalate.

My focus is on growth stocks that have already witnessed a meaningful correction. Amidst the crisis or even before that. I believe that these growth stocks are worth considering at current levels. Once the market bounces back, these stocks are poised for a sharp rally. Growth Stocks to Buy: Rada Electronic (RADA)

Defense stocks have been in focus as a result of the rise in geopolitical tensions. RADA stock has surged by 41% in the last month. The high-growth defense stock is still worth considering with a medium to long-term investment horizon.

Rada Electronic is the manufacturer of tactical radar arrays. The company believes that it has a global addressable market of $6.0 billion .

For 2021, Rada reported revenue of $117.2 million. On a year-on-year basis, revenue increased by 54%. Further, the company is targeting to reach revenue of $250 million in the next 3-4 years .

However, with Russia-Ukraine tensions, it’s likely that defense spending will increase for the United States and NATO allies. It’s very probable that revenue growth will be faster than anticipated in the next few years.

Another important point to note is that Rada reported an adjusted EBITDA margin of 25% for Q4 2021 as compared to 17% in Q4 2020. Key margins have been expanding. With scale, the company seems positioned to deliver healthy cash flows.

Also, Rada is diversifying from a geographical perspective. Last year, the company set up a joint venture in India. As the addressable market reach increases, growth is likely to accelerate.

Overall, Rada stock is worth buying even after the recent rally. I would also not be surprised if the company is an acquisition target from one of the big defense players. DraftKings (DKNG)

DKNG stock has slumped 75% in the last 12-months. However, it seems that the stock has finally bottomed out.

Recently, Morgan Stanley assigned an “overweight” rating for the stock with a price target of $31 . DKNG trades today at a little more than $17.50.

DraftKings reported revenue of $1.3 billion in 2021. For the coming year, the company has guided for revenue (mid-range) of $1.9 billion. This would imply a year-on-year growth of 46%.

Although the company is likely to continue reporting EBITDA loss, it’s not a significant concern. After all, to remain competitive DraftKings is investing heavily in sales, marketing and product development.

It’s worth noting that for 2021, the average revenue per paying user was $67. In the prior year, the average revenue was $51. Once costs stabilize or decline, the company is positioned to deliver robust EBITDA.

DraftKings also estimates that the total addressable market for iGaming and online sports betting is likely to reach $67 to $80 billion . As more states legalize online gaming and betting, the company’s market potential will increase. It’s therefore likely that robust top-line growth will sustain in the coming years. Growth Stocks to Buy: Marathon Digital (MARA)

Marathon Digital is among the top Bitcoin miners to consider with the company positioned for strong growth in the next 12-24 months.

The recent decline in price presents a good opportunity to accumulate Bitcoin ( BTC-USD ), but a proxy for exposure to Bitcoin is through investment in mining companies.From a growth perspective, Marathon reported mining capacity of 3.8EH/s in February. The company expects capacity to increase to 13.3EH/s by mid-2022. Further, by early 2023, capacity is likely to increase to 23.3EH/s . The best part of growth is still to come for Marathon.The company claims it can mine 66 Bitcoins per day at a hashing capacity of 13.3EH/s. Assuming Bitcoin trades at $40,000, the company is positioned for monthly revenue of $79.2 million. This would also imply an annualized revenue potential of $950 million.Once more capacity is added by early 2023, Marathon is likely to have an annualized revenue potential in the range of $1.3 to $1.5 billion. With the company estimating blended mining cost of $6,235 per […]

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