The average Robinhood account is worth about $3,700. That might not seem like a lot of cash when some stocks cost hundreds or thousands of dollars per share, but putting that modest sum on the right stock could generate big, multibagger gains over the long term.
So if you have at least $3,000 in your account, I'd advise splitting that cash evenly across these three underappreciated stocks -- Pinterest (PINS 1.16%), Aehr Test Systems (AEHR +6.54%), and Polestar Automotive (PSNY +7.94%) -- which could all gain a lot more attention as the macro environment improves.
Image source: Getty Images.
1. Pinterest
A thousand dollars would be enough to buy nearly 30 shares of the social networking company Pinterest. Pinterest's growth accelerated significantly during the pandemic as more people shared their hobbies, interests, and shopping ideas on its pinboards. Its revenue rose 48% in 2020 and 52% in 2021. But in 2022, its revenue only climbed 9% as it struggled to maintain its momentum in a post-pandemic market. Its monthly active users (MAUs) had also dropped to 450 million by the end of 2022, compared to its pandemic-era peak of 478 million MAUs in the first quarter of 2021.
NYSE: PINS
Key Data Points
But over the past year, Pinterest's MAU growth accelerated again and finally hit a fresh high of 482 million MAUs in Q3 of 2023. Its total revenue growth also accelerated for three consecutive quarters, and it expects that acceleration to continue into Q4. Analysts expect its revenue to rise 9% in 2023 and 16% in 2024.
That growth, which it attributed to an influx of Gen Z users, its overseas expansion, and new AI-driven recommendations, silenced the bears who had dismissed Pinterest as a fad stock. As Pinterest stabilized, its margins rose sequentially throughout 2023 as it executed layoffs and other cost-cutting measures. That's why analysts expect Pinterest's adjusted EPS to soar 73% in 2023 and 22% in 2024 -- and why its stock still looks reasonably valued at 30 times forward earnings.
2. Aehr Test Systems
Aehr didn't gain much attention when it went public 26 years ago, but the semiconductor testing equipment maker carved out a high-growth niche over the past few years with its production of testing and burn-in equipment for silicon carbide wafers.
NASDAQ: AEHR
Key Data Points
Silicon carbide chips can operate at higher voltages, temperatures, and frequencies than traditional silicon chips, which makes them ideal for short-length LEDs, lasers, 5G base stations, military radars, and electric vehicles. Only a handful of chipmakers produce these next-gen chips, and even fewer companies manufacture their testing equipment.
Aehr's early mover advantage in this area -- along with the rapid growth of the EV market -- boosted its revenue by 206% in fiscal 2022 (which ended last May). Its revenue rose another 28% in fiscal 2023, and analysts expect 59% growth in fiscal 2024 as the silicon carbide market continues to expand. They also forecast its adjusted earnings to increase 76% this year and 43% in fiscal 2024.
Those are stellar growth rates for a stock that trades at just 24 times forward earnings. Aehr still has customer concentration issues (79% of its revenue came from a single client in fiscal 2023), and it might face competition from bigger semiconductor equipment makers, but I believe it's a promising long-term play on this next generation of high-end chips. With $1,000, you could pick up roughly 30 shares of Aehr today.
3. Polestar Automotive
Polestar was originally a high-performance subsidiary of Volvo that was spun out as public company in 2022 to focus on its production of electric vehicles. It's already commercially launched a single vehicle, the Polestar 2 sedan, and plans to roll out its next vehicle, the Polestar 3 SUV, in early 2024. Unlike many other smaller EV makers that are struggling to ramp up their production, Polestar is already producing tens of thousands of vehicles each year.
NASDAQ: PSNY
Key Data Points
Polestar manufactured 28,677 vehicles in 2021, 51,491 in 2022, and is on track to produce about 60,000 this year. Its production was throttled by supply chain constraints and the delayed launch of the Polestar 3 (which was originally scheduled to arrive this year before being derailed by software issues). However, analysts still expect its revenue to rise 10% in 2023 and surge 66% in 2024 as it resolves its bottlenecks and launches the Polestar 3.
Those growth rates are impressive for a stock that trades at just 1.5 times next year's sales. Polestar isn't profitable yet, but it ended its latest quarter with $951 million in cash and equivalents. Volvo also still owns nearly half of the company and remains one of its top strategic partners. Simply put, Polestar shouldn't be tossed aside with the market's other underdog EV makers. It's a disciplined company that is successfully scaling up its business and has plenty of room to run -- so it might be a smart move to buy about 400 shares of this overlooked EV maker for $1,000.
