3 Undiscovered Stocks to Surge 1,000% by 2028: June Edition

Stocks to buy

Whenever I find a good listed business, I check for analyst interest and social media attention related to the stock. If the stock has significant coverage and is in the limelight among retail investors, it’s likely that the idea is overvalued. Of course, this is not a strict rule, but I prefer to consider exposure to undiscovered stocks than ideas that might be overhyped.

With limited market attention, undiscovered stocks generally trade at attractive valuations. It makes sense to buy these stocks and hold with patience. When the time comes, multibagger returns are more likely.

The three undiscovered stocks on this list have good fundamentals, positive industry outlook and, therefore, visibility for sustained growth. In my view, these stocks could increase tenfold within the next five years. Let’s discuss the business factors that are likely to be growth catalysts.

Ibotta (IBTA)

Closeup of mobile phone screen with logo lettering of ibotta (IBTA) cashback app on computer keyboard (focus on left letter t upper lettering)

Source: Ralf Liebhold / Shutterstock.com

Ibotta (NYSE:IBTA) is a relatively new listing and that’s the reason for the stock remaining under-the-radar. After touching highs of $117, IBTA stock has corrected to current levels of $77. This is a golden opportunity to accumulate the stock considering the business potential.

Ibotta offers software that allows consumer packaged goods brands to deliver digital promotions to consumers. The company has a strong client base of more than 850 corporate partners and this includes blue-chip companies like Walmart (NYSE:WMT), Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP), among others.

Currently, Ibotta operates solely in the United States, but the total addressable market is significant at $200 billion. This provides ample headroom for growth in the coming years. For 2023, Ibotta reported revenue of $320 million, which was higher by 52% on a year-over-year (YOY) basis. Further, the EBITDA margin was healthy at 28%. Revenue growth for Q1 2024 was 43% YOY at $82.3 million.

Considering the big market potential, it’s likely that stellar growth will continue. I also see the likelihood of expansion outside the U.S. that will boost growth in the next few years.

Zeekr Intelligent Technology (ZK)

facade of ZEEKR electric car store with customer. Chinese EV brand owned by Geely. ZK stock

Source: Robert Way / Shutterstock.com

Zeekr Intelligent Technology (NYSE:ZK) is another new listing that is a potential multibagger. Zeekr is an electric vehicle company in China that is in an early growth stage. With an innovation edge, Zeekr is likely to deliver robust growth in the coming years.

Recently, Zeekr reported Q1 2024 results. Vehicle deliveries increased by 117% YOY to 33,059. Deliveries have continued to remain robust beyond the quarter. It’s worth noting that Zeekr has set an ambitious target of delivering 230,000 vehicles during 2024.

Another important point to note is that vehicle margin for the quarter was 14%, higher by 390 basis points YOY. As vehicle deliveries accelerate, it’s likely that margin improvement will be sustainable.

On the flip-side, Zeekr reported loss from operations of $289 million for Q1. However, the markets are likely to focus on deliveries growth as operating level losses are expected for an early-stage company. Considering the company’s targeted growth trajectory, I expect losses to narrow on operating leverage.

Leonardo DRS (DRS)

A photograph of two jet fighters flying above clouds. defense stocks. Defense Stocks to Sell

Source: Shutterstock

Global defense spending touched record highs of $2.44 trillion last year. With rising geopolitical tensions, it’s likely that defense spending will continue to swell. Among the emerging defense players, Leonardo DRS (NASDAQ:DRS) looks attractive. The company is a provider of defense electronic products and systems.

The first positive to note is that Leonardo reported an order backlog of $7.8 billion as of Q1 2024. On a YOY basis, the company’s order backlog swelled by 84%. The order intake is an indication of industry tailwinds and the acceptance of the defense player’s product and solutions.

I am also bullish on Leonardo considering the innovation factor. The company recently provided advanced laser system to protect the U.S. military aircraft from missile threats. Last month, the emerging defense player was awarded a contract to build the next-generation aerial refueling operator station for the KC-46 Pegasus tanker fleet. The company’s technological edge will ensure that order intake remains robust for Leonardo.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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