Cheap Growth Stocks to Buy Now

You’ve probably missed it—the best time to buy the cheapest growth stocks. It wasn’t last week, or even last year. In fact, it might have been months ago when the market bottomed out, but does that mean you’re too late? Absolutely not. The stock market is an unpredictable beast, and the opportunities never truly vanish, especially for those with an eye for undervalued growth stocks. Growth stocks can be a bit of a rollercoaster, but the potential for long-term rewards is massive.

Now, you’re probably wondering, "Where are these hidden gems?" The truth is, many investors are too focused on the big names, the Apples and Teslas of the world, when some of the most promising growth stocks fly under the radar. This article will dive into the current landscape of cheap growth stocks and how they could set you up for future success.

The Art of Finding Value in Growth Stocks

Growth stocks are typically companies that reinvest their earnings back into the business to expand and improve rather than paying dividends. These companies may seem expensive based on traditional valuation metrics, but their growth potential is what makes them stand out. However, some growth stocks are now trading at significant discounts due to market corrections or sector rotations. This is where the opportunity lies.

Why Growth Stocks Are Now More Affordable

Several factors have led to growth stocks being priced lower than expected:

• Market Corrections: Stock market corrections in recent years have sent several growth stocks tumbling. The S&P 500 and NASDAQ have seen sharp sell-offs, often impacting high-growth names the hardest.

• Interest Rates: With rising interest rates, companies with high debt (often growth companies) become less attractive due to increased borrowing costs. This has put downward pressure on stock prices.

• Sector Rotations: Investors tend to rotate between sectors. While the focus may have been on tech and healthcare over the last few years, other sectors like energy and utilities have taken center stage recently, leaving many high-growth companies undervalued.

What does this mean for you? Now might be the perfect time to jump in and take advantage of these discounted growth stocks. Below, we’ll explore a few that are primed for recovery and long-term growth.

1. Palantir Technologies (PLTR)

Palantir is a data analytics company that focuses on providing intelligence to various sectors, including governments and corporations. It’s been a volatile stock since its IPO but has shown consistent revenue growth and is expected to benefit from increased government and corporate data spending. The stock is currently priced lower than many of its tech peers, making it a cheap growth stock with long-term potential.

• Market Cap: $32 billion
• P/E Ratio: N/A (the company is not yet profitable)
• Revenue Growth: 22% YoY (2023)

2. SoFi Technologies (SOFI)

SoFi is an online personal finance company with offerings ranging from student loans to stock trading. Its growth story is strong with significant user growth and expansion into new areas such as banking. SoFi has faced regulatory headwinds, which has kept its stock price low, but it remains a strong growth candidate.

• Market Cap: $7 billion
• P/E Ratio: N/A (currently unprofitable)
• Revenue Growth: 45% YoY (2023)

3. Unity Software (U)

Unity creates the software that powers video games, but its technology is also being applied in industries like architecture, engineering, and construction. The company’s stock has taken a hit due to the broader tech sell-off, but it’s poised for growth as demand for immersive digital experiences continues to rise.

• Market Cap: $13 billion
• P/E Ratio: N/A (not profitable)
• Revenue Growth: 29% YoY (2023)

4. Upstart Holdings (UPST)

Upstart leverages artificial intelligence to revolutionize the lending industry by assessing creditworthiness using more than just FICO scores. While the stock has been punished due to concerns about rising interest rates, the company’s innovative approach to lending could lead to significant growth as the financial industry modernizes.

• Market Cap: $2.5 billion
• P/E Ratio: N/A (not profitable)
• Revenue Growth: 18% YoY (2023)

5. Shopify (SHOP)

Shopify’s platform powers eCommerce for businesses worldwide, allowing even small businesses to create professional online stores. After a massive pandemic-fueled growth spurt, the company’s stock has come down significantly, but eCommerce is far from over. With more businesses moving online, Shopify is still positioned as a key player in this market.

• Market Cap: $72 billion
• P/E Ratio: 200+ (hefty, but expected for a growth company)
• Revenue Growth: 21% YoY (2023)

6. DraftKings (DKNG)

DraftKings operates in the expanding world of online sports betting and gaming. With the legalization of sports betting in more U.S. states, DraftKings has substantial growth potential. The stock is down from its 2021 highs, making it an attractive option for long-term investors who believe in the future of online gambling.

• Market Cap: $12 billion
• P/E Ratio: N/A (not profitable)
• Revenue Growth: 57% YoY (2023)

Why Timing Matters

One of the biggest mistakes investors make is thinking they need to buy a stock at its absolute lowest price to benefit from its growth potential. In reality, nobody can predict the exact bottom. What's more important is recognizing a value opportunity when it presents itself. By getting into these stocks now, you set yourself up to ride the wave of growth as the market stabilizes and these companies continue to scale.

Risks to Consider

It’s important to note that growth stocks carry risks. Many of the companies listed above are not yet profitable, and some could take years to deliver the returns you're looking for. If interest rates continue to rise or if market volatility increases, growth stocks could face more downward pressure. However, for long-term investors, the potential upside often outweighs the risks, particularly when buying at a discount.

Diversifying Your Portfolio

While it's tempting to pour all your resources into a few high-potential growth stocks, diversification remains key. A well-rounded portfolio should include a mix of growth, value, and defensive stocks. This approach mitigates risk and ensures that you're prepared for any market conditions.

Here's a sample table of how a diversified portfolio might look:

Stock Type	Example Stocks	Weighting (%)
Growth Stocks	Palantir, SoFi, Unity	40%
Value Stocks	JPMorgan, Ford	30%
Defensive Stocks	Procter & Gamble	20%
International	Alibaba, Samsung	10%

Conclusion: Are These Growth Stocks Worth the Risk?

Cheap growth stocks offer incredible potential, but they also come with volatility and risk. Whether you're interested in technology disruptors like Unity and Palantir, or betting on the future of finance with SoFi and Upstart, the key is to invest with a long-term mindset. While short-term price swings can be unsettling, the true value of these companies will reveal itself over time. As always, do your own research and consult with a financial advisor before making investment decisions.

Remember, sometimes the best opportunities are the ones most people overlook.