After years of being left in the dust by growth stocks, value stocks are poised for outperformance in the coming years. With their shares currently priced at an even greater-than-average discount to their high-growth peers, value stocks can rally hard when they come back into favor with investors.

Yet it's often at the intersection of value and growth that the best investment opportunities can be found. Read on to learn about one high-growth company with bargain-priced shares that are poised to deliver market-crushing returns to investors.

A miniature bull on top of a keyboard button labeled buy

Image source: Getty Images.

A growth stock that trades like a value stock

Facebook (NASDAQ:FB) needs little introduction. More than 2 billion people use the social media titan's platforms (which include Facebook, Instagram, WhatsApp, and Messenger) every day. Its massive global scale gives its powerful network effects. People want to be where their friends and family are, and each new person who connects to its platforms makes them more valuable for other users.

The information that users share on Facebook's network makes it a trove of data for marketers, who pay handsomely to access it. Its advertising revenue jumped 28% year over year to $17.4 billion in the third quarter. 

Better still, ad revenue is likely to continue to grow at a healthy clip in the years ahead. The digital advertising market is projected to reach $520 billion by 2023, according to Juniper Research, up from $294 billion in 2019. Moreover, Facebook is likely to absorb "an outsized portion" of the industry's growth in the coming years, according to analysts at investment bank Stifel, fueled by the increasing popularity of its social media platforms and new product launches.

More opportunities for growth

In addition to its core advertising business, Facebook is well-positioned to profit from other major trends, such as advances in virtual and augmented reality. It is investing aggressively to strengthen its expertise in these areas; it purchased virtual reality (VR) leader Oculus for $3 billion back in 2014 and recently scooped up non-invasive neural interface start-up CTRL-labs for approximately $1 billion.

These investments have situated it as a leader in virtual and augmented reality at a time when these technologies are beginning to see broader adoption. Facebook's revenue and profits could scale quickly in these high-growth industries. The VR market is forecast to grow from $7.9 billion in 2018 to $44.7 billion by 2024, according to research firm MarketsandMarkets. Meanwhile, the augmented reality (AR) market is projected to soar from roughly $3.5 billion in 2017 to nearly $200 billion by 2025, according to Statista. 

Bargain-priced shares

Despite its intriguing growth prospects, Facebook's stock is priced attractively relative to the market. Data privacy and regulatory concerns have weighed on the social media giant's shares in recent years, resulting in a stock price that has essentially tread water for the last two years. But Facebook's revenue has grown rapidly during this time. 

And now, after it's invested heavily in technology and processes that should allow it to better safeguard its users' personal information, profits are once again set to rise at an impressive clip, with analysts forecasting 18% annualized EPS growth over the next half-decade. 

Yet shares can currently be purchased for less than 22 times analysts' earnings estimates for 2020, and less than 20 times estimates if you back out the nearly $18 per share in net cash that it has on its balance sheet. With the market as a whole (as measured by the S&P 500) trading at more than 19 times forward earnings, Facebook is a relative bargain, given its more powerful competitive advantages and superior growth rates versus the average stock in the index. This can be seen when we compare Facebook's price-to-earnings-to-growth, or PEG, ratio to that of the S&P 500. With an 18% projected earnings growth rate and a forward P/E of 21.6, Facebook is currently trading at a PEG of 1.2. The S&P 500, in contrast, is growing earnings at about 10.5% annually and is trading at 19.3 times forward earnings estimates. That places the S&P 500's PEG at more than 1.8, or about 50% higher than that of Facebook.

All told, a single stock can sometimes fit into both growth and value classifications. When that's true for a competitively advantaged business, investors should take notice, as it likely represents a particularly compelling value, as Facebook's shares do today.