While being riskier bets, small or mid-cap companies have greater potential for higher returns than their large cap counterparts. But it is necessary to acknowledge that the probability of achieving these high returns is pretty low.

For now, there are two undervalued growth stocks in this category -- and they are still very much unappreciated by the market. They are Bed Bath & Beyond (BBBY) and Lucira Health (LHDX). Here's why they are actionable now. 

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1. Bed Bath & Beyond 

Bed Bath & Beyond has been making massive progress in turning around its retail bedding, bath, kitchen food prep, indoor decoration, and home organization business for a while. The company digitized its platform and closed many of its unprofitable stores. During the first fiscal quarter of 2021 (ended May 29), Bed Bath & Beyond grew its revenue by a solid 49% year over year to a little over $1.9 billion. Simultaneously, the company managed to significantly dampen its losses. In terms of free cash flow, the company lost $102 million compared to negative $437 million in Q1 2020.

E-commerce now accounts for 38% of its overall sales. What's more, Bed Bath & Beyond recently partnered with DoorDash (DASH 2.21%) to offer same-day delivery for customers in the U.S. and Canada. 

The company is also doing a great job in terms of capital management. Its total liquidity amounts to $1.9 billion, compared to about $1.2 billion in debt. In addition, based on the success of its turnaround, the company is actively buying back shares at a low price as a thank-you note to shareholders. Bed Bath & Beyond repurchased 5 million shares alone in Q1 and has repurchased 17% of the company since the program's inception. It's always good when companies buy back their stock -- especially after difficult years of operations -- as it indicates the entity is rolling in more than enough for it to stay afloat at use cash for other ventures.

At the end of the day, Bed Bath & Beyond stock is still incredibly cheap, at a mere 0.35 times revenue. So despite a the stock gaining 240% over the last 12 months, there is still room to open a stake in the company without getting burned. 

2. Lucira Health

COVID-19 testing company Lucira Health became public only in February, but it has been plagued by problems since. In fact, shares are down almost 80% in just five months. So how can a stock like this be something investors can count on?

Lucira's flagship device is a single-use, do-it-yourself COVID-19 test kit that received regulatory clearance for over-the-counter use in April. Patients perform a self-administered nasal swab using the Lucira Check It, which then spews out a positive result within 11 minutes and a negative result in half an hour. The test is 98% accurate (excluding very low viral low samples) and can detect all major variants. 

Each Check It test kit comes with free shipping and costs just $55. Insurance usually covers the cost of the test. Overall, it was a major innovation by Lucira Health, but it came a tad bit too late. 

Coronavirus vaccines took the spotlight in the fight against the pandemic. Their mass roll-out and ability to prevent nearly all cases of severe COVID-19 illness had made coronavirus testing rather obsolete. Hence, investors began ditching the stock en masse. 

Recently, however, the emergence of the deadly lambda and delta variants and their ability to bypass vaccine protection have once again reignited the demand for COVID-19 testing. Moreover, the emergence of mutant strains has led many nations (at least 131 of them) to mandate a negative COVID-19 test before travelers can enter. Thus, there's a sound value proposition behind a fast, accurate COVID-19 test that could be administered anywhere.

Lucira Health's market cap has fallen to absurd levels -- less than $240 million. What's more, its enterprise value is only about $75 million after adjusting for the $176 million in cash it raised from its IPO. At this point, even a tiny amount of revenue from Check It could pique the market's interest in Lucira. It is, therefore, a compelling healthcare stock to add to one's watchlist.