Three Underrated Growth Stocks Poised for Success

Many investors are aware that the market has experienced a significant decline since its peak in February. However, few recognize that certain enticing stocks began to decline prior to the overall market correction and have yet to show signs of recovery. Wall Street seems to have lost interest in these companies, overlooking the positive attributes that make their stocks appealing.

But I’m not among those investors. If you’re looking to invest some cash at a lower price, consider these three outstanding growth stocks that are being unjustly ignored by many in the market.

PepsiCo

If you’re confused about why PepsiCo (PEP -1.16%) has seen its shares fall 25% from its May 2023 peak, you’re not alone. Inflation is certainly affecting sales growth and profits, and fears surrounding the adoption of anti-obesity drugs are not without basis.

As the saying goes, the punishment doesn’t fit the crime. Investors have factored in more negative news than actually exists while disregarding the reasons to invest in this beverage titan.

The dividend serves as the primary bullish argument here and understandably so. New investors can step into PepsiCo shares while enjoying a forward-looking dividend yield of 3.7%, in addition to owning a stock that has increased its dividend payment for 53 consecutive years. This streak is unlikely to end soon.

Iovance Biotherapeutics

With a market cap of $1.2 billion, Iovance Biotherapeutics (IOVA -0.28%) doesn’t attract much attention. Its size makes it less noticeable to the financial media and most investors, but valuable opportunities can be found in smaller firms.

Iovance Biotherapeutics is focused on biopharmaceuticals, notably its tumor infiltrating lymphocyte (TIL) cancer therapy named Amtagvi, which made history as the first cellular treatment for unresectable or metastatic melanoma approved by the U.S. Food and Drug Administration (FDA). This is likely not its only approval, as the FDA fast-tracked Amtagvi due to urgent public need, and the underlying science supports an additional 12 clinical trials involving the drug.

Initial demand looks promising. Iovance’s revenue for the fourth quarter reached $73.7 million, up from $58.6 million in the third quarter, with expectations of generating between $450 million and $475 million in revenue in 2025. Analysts predict sales around $735 million next year, with $884 million likely the following year.

Sirius XM Holdings

Add satellite radio provider Sirius XM Holdings (SIRI 1.78%) to your list of overlooked stocks by Wall Street.

During its early years in the late 1990s, satellite radio transformed the audio entertainment landscape. However, with the advent of broadband, including mobile broadband, the industry faced significant challenges. Sirius XM’s performance has been lackluster since then, primarily because it did not capitalize on its strengths, such as brand recognition and talented personalities. Many investors have since lost faith in the company.

That may be a mistake. The company is finally addressing issues that it should have tackled years ago, such as entering the streaming market by making its satellite radio accessible via a web app. Furthermore, Sirius XM’s acquisition of streaming platform Pandora in 2019 has been a step forward.

Additionally, Sirius XM is rethinking how to monetize its platform by combining subscription-based and ad-supported access to its programs. Its new initiatives include tools that personalize advertising while maintaining listener privacy. Much like PepsiCo and Iovance, recent efforts have yet to significantly impact Sirius XM’s stock price, which continues to hover low.

This year could signal a turning point for Sirius XM. Cooling satellite capital expenditures, along with other cost-cutting measures and new programming aimed at a broader audience, are set to take effect. The stock currently has a forward-looking dividend yield of 4.7%, providing a decent return while awaiting a potential turnaround.