Investing in growth stocks with short-term setbacks can yield substantial long-term gains. Despite inevitable challenges, solid companies often present attractive investment opportunities. The key is to focus beyond immediate concerns and recognize the long-term potential. Three growth stocks currently considered bargains are AbbVie, Super Micro Computer, and Walt Disney, each with compelling reasons to invest. AbbVie, a robust pharmaceutical player, has amplified its portfolio through strategic acquisitions like Allergan and ImmunoGen, enhancing its focus on innovative cancer treatments.
The company's formidable free cash flow, recorded at $17.8 billion over the past 12 months and consistently surpassing $20 billion for the past three years, positions it well for future growth investments. Although recently impacted by the loss of Humira's patent protection, AbbVie is optimistic about its prospects, forecasting high single-digit annual revenue growth starting next year. Trading at a forward price-to-earnings ratio of just 16, AbbVie presents an appealing opportunity for investors aiming at long-term gains.
Super Micro Computer, or Supermicro, witnessed a significant interest earlier this year, driven by its growth potential in the artificial intelligence domain. Strong demand for its servers and IT infrastructure led to sales doubling compared to the previous year. Despite a 50% drop in its share price due to a short-seller report and concerns about profit margins and tech valuations, the company's growth potential remains significant. If Supermicro can address its margin issues, its forward P/E ratio of less than 15 suggests the possibility of excellent future returns, fueled by ongoing AI developments.
Walt Disney, a globally renowned brand, has seen only modest stock growth this year, with a 5% increase since January. Slow demand at theme parks has made investors wary, overshadowing positive results in the direct-to-consumer streaming business, which turned a $47 million operating profit recently. However, the larger concern for Disney investors remains its total revenue, which grew just 2% year-over-year during the nine months ending June 29. Amidst economic challenges and travel slowdowns, Disney is also reorienting its content strategy, prioritizing quality over quantity.
This shift could enhance the performance of its streaming services. Despite current economic headwinds, Disney's long-term outlook remains promising, particularly as it increasingly turns a profit from streaming—a common hurdle for media companies. With a valuation of under 18 times projected future earnings, Disney stands as an underrated growth stock with significant potential.
