3 Ridiculously Cheap Growth Stocks Investors Can Buy Right Now

In this market environment, investors of all stripes have their work cut out for them. This market can best be described as one which provides an incredible assortment of options for investors looking to pick individual stocks to choose from, but also a wide assortment of investable options with valuations and balance sheets that may also be considered untenable by those looking to tilt their portfolios more toward value and quality right now. 

In the world of growth stocks, there happen to be a number of mega-cap companies I think are worth buying right now. But from a valuation perspective, I can also understand why some investors would be hesitant to step into such stocks at their current valuations.

Here are three companies I think provide the right mix of growth at a reasonable price (“GARP”). Let’s dive in. 

Tata Consultancy Services (TCS)

I don’t normally cover companies that operate outside the U.S., especially when it comes to growth. That’s because many of the high-powered growth stocks most investors focus on are based in the U.S., and there continues to be a prevailing narrative that these companies are among the best in the world in this regard. I don’t disagree.

However, one market I’ve been watching much closer of late is the Indian market. Tata Consultancy Services (NSE:TCS) happens to be the largest and most prominent IT services provider in the fast-growing country, with a strong balance sheet and shareholder-friendly capital return policies that have benefited long-term investors who have held this stock over the long-term. Indeed, over the past five years, Tata’s double-digit earnings growth rate has continued despite volatility in the Indian market – a factor that’s begun to catch the attention of fundamentals-oriented investors like myself.

With recent special dividends announced, and a strong dividend track record, this is an international stock I think long-term investors may want to pay attention to. With the company continuing to transform into a cloud and AI powerhouse, TCS is a stock I think investors won’t want to sleep on right now. 

Five9 (FIVN)

Sticking with the cloud space for a minute, Five9 (NASDAQ:FIVN) is a leading player in the cloud contact center-as-a-service (CCaaS) market, and to be honest, this is a market I haven’t dove into as much as I probably should. As a key player in this space, Five9 is uniquely well-positioned to benefit from what many investors believe will be a very long-term (and meaningful) growth trajectory for companies looking to drive AI-related automation and improve customer engagement in the cloud. 

Five9 generates the vast majority of its revenue via a subscription model, and has continued to grow revenue at a rate of around 26% in recent years. This company’s stock price has seen similar growth (actually outpacing the company’s top line numbers over the past five years), but even with this in mind, the stock currently trades at around 10-times forward earnings.

In my view, that’s far too cheap of a multiple for a company that’s growing its operating cash flow at an impressive clip, while also providing investors with very robust fundamentals. With a gross profit margin of nearly 55% and an adjusted EBITDA margin of 19%, this is a company I think will be seriously profitable in the years to come (despite negative TTM earnings numbers right now).

A more speculative pick relative to other currently profitable names, I do think Five9’s strategic transformation which includes various AI integrations and an expansion model into new markets deserves a look. With forward growth rates expected to come in the mid-teens, this is a growth stock I’m seriously considering buying right now. 

Teradyne (TER)

Last, but certainly not least on this list of cheap growth stocks investors should consider is Teradyne (NASDAQ:TER). 

Teradyne is among the global leaders in the automated test equipment market, with its core services being utilized most within the chip, robotics and smart manufacturing sectors. For investors who believe that more on-shoring will take place (alongside greater automation), Teradyne could be a smart way to invest in these trends. With historically high profit margins (like the other picks on this list), and exposure to the high-growth semiconductor market, I view Teradyne as a long-term picks and shovels play on what could be a very lucrative space to invest in. 

With a valuation multiple of just 24-times right now, I think Teradyne’s valuation has plenty of room to increase as the company’s growth continues. I’m not even banking on growth acceleration per se with this name. Rather, I think the company’s current multiple undervalues its growth potential in a space with very strong secular growth tailwinds for decades to come. 

For investors looking for a company with outsized upside potential and trading at a reasonable multiple, Teradyne is a name to keep on the watch list right now. 

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