Most investors know the market's down quite a bit from February's high. Not all investors realize that a handful of compelling stocks were already sliding before the marketwide correction started, and that several of these same names haven't yet even hinted at a recovery. Wall Street's seemingly given up on them, looking right past everything that makes these companies -- and their stocks -- so promising.
Not me, though. If you've got some cash you're looking to put to work at a bargain price, here's a closer look at three great growth stocks that are being wrongly overlooked by most other investors.
PepsiCo
If you're struggling to figure out why PepsiCo (PEP +0.67%) shares are now down 25% from their May 2023 peak (and still priced within sight of January's four-year low), you're not alone. Inflation is clearly crimping sales growth and profits, and concerns about the rise of anti-obesity drugs aren't exactly unmerited.
As the saying goes, the punishment doesn't fit the crime. Investors have priced in far more bad news than actually exists while ignoring all the reasons to own a piece of this beverage giant.
The dividend is the chief bullish argument here, and understandably so. Newcomers will not only be stepping into PepsiCo shares while its forward-looking dividend yield stands at 3.7%, but plugging into a stock that's now raised its dividend payment every year for the past 53 years. That streak isn't likely to end anytime soon.
NASDAQ: PEP
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There's a bigger, more philosophical reason to own a stake in this beverage company, which also happens to own snack-chip company Frito-Lay (Lay's chips, Cheetos, Doritos, and more). That's the way it's structured.
Unlike archrival Coca-Cola -- which outsources the vast majority of its product production to third-party bottlers -- PepsiCo owns the bulk of its own production facilities. This leads to thinner profit margins, since bottling and snack food production are relatively expensive. But this structure also provides PepsiCo with more control of its business. Coca-Cola simply can't replicate that with third-party production partners that have their own profit and operational agendas.
So far, this nuanced difference hasn't mattered much to investors. While PepsiCo's stock is near a multi-year low, Coca-Cola's stock is within reach of last year's record high.
Have faith that the market will eventually figure everything out. In the meantime, use this ticker's weakness to your advantage.
Iovance Biotherapeutics
With a $1.2 billion market cap, Iovance Biotherapeutics (IOVA 2.70%) doesn't turn many heads. It's just not big enough to grab much of the financial media's or most investors' attention. As the old adage reminds us, however, good things come in small packages.
Iovance Biotherapeutics is a biopharma company. Its chief product is a tumor infiltrating lymphocyte (TIL) cancer therapy called Amtagvi, which early last year became the first-ever cellular treatment for unresectable or metastatic melanoma to be approved by the U.S. Food and Drug Administration (FDA). That's not likely its last approval, though. The FDA expediated the first approval of Amtagvi, underscoring the public need. Indeed, its underlying science is sound enough to justify 12 other clinical trials of the drug, by itself and in combination with other therapies.
Iovance also owns a drug called Proleukin, after acquiring it from Clinigen in 2023. Proleukin's chief purpose is improving the efficacy of Amtagvi, and isn't the company's top profit center in and of itself.
Initial demand is strong. Iovance's fourth-quarter revenue of $73.7 million is well up from the third quarter's top line of $58.6 million, and the company's calling for 2025 revenue of between $450 million and $475 million. That's an average of around $115 million per quarter... a number that should get progressively bigger as time marches on. Analysts are modeling sales of around $735 million next year, with a top line of $884 million likely the year after that.
NASDAQ: IOVA
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All this begs one question: Why are Iovance Biotherapeutics shares down more than 90% from their 2021 high and nearly trading at a multi-year low when the news is so promising now?
The answer is that the market simply got too excited and too pre-emptive between 2019 and 2021, when it became clear that Amtagvi was a winner. Investors are also worried about a lack of actual earnings, and what this company might need to do to survive the foreseeable future while Amtagvi is growing into its own.
As is also so often the case, the sellers have arguably overshot their target (assisted by marketwide weakness of late).
Sirius XM Holdings
Finally, add satellite radio outfit Sirius XM Holdings (SIRI 1.10%) to your list of stocks that Wall Street is erroneously overlooking.
In its infancy back in the late 1990s, satellite radio was game-changing. Not only did it offer more flexible access to audio entertainment, Sirius XM's stable of on-air talent was a major draw as well.
Then the advent of broadband -- and mobile broadband in particular -- changed everything. People now had constant access to a growing universe of low-cost and even free entertainment of all types. This company and its stock have mostly been lackluster performers since then, largely because Sirius XM simply didn't respond as well as it could have by using its strengths, like its talent and its brand name. Indeed, it's been so long since Sirius XM has offered any real glimmer of hope for a revival that many investors have simply given up on it.
That's a big mistake. Much of what this organization should have done a few years back is finally being done now.
NASDAQ: SIRI
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One of these moves is a foray into the streaming radio market. Sirius XM made its satellite radio accessible via a web app, but it lacked widespread recognition as such. So, in 2019, Sirius XM acquired web-native streaming audio platform Pandora, and it's growing.
The company's also rethinking how it can best monetize its personality-driven platform, which includes creating a more thoughtful hybrid of subscription-based and ad-supported access to its programming. It's getting really good at the advertising thing, too. In 2022, Sirius XM unveiled AudioID, allowing advertisers to individually tailor ads for listeners without violating their privacy. Last year, the company released a similar updated tool specifically for Pandora called Unified ID 2.0 (or UID2), once again remaining relevant in an arena that's increasingly valuing personal privacy.
Similar to PepsiCo and Iovance, recent developments haven't significantly benefited Sirius XM. Business is flat, and the stock's price is dwindling.
This year could and should mark something of a turning point for Sirius XM. Not only are capital expenditures on satellites set to cool, a bunch of other cost-culling initiatives -- along with new programming aimed at a wider audience -- are finally going to get a chance to kick in.
This stock's forward-looking dividend yield stands at 4.7%, by the way. That's not a bad little reward while waiting for this ticker to finally turn around.
