2 Undervalued Growth Stocks With Massive Upside Potential

In this video, we'll show you two of the best growth stocks to buy in August, including one company sitting directly in the path of the massive artificial intelligence infrastructure buildout. These are businesses benefiting from powerful long-term trends, improving earnings expectations, and competitive positions that could allow them to keep compounding as their markets expand. And the first company may be one of the most important infrastructure plays behind the AI boom, because the more powerful artificial intelligence becomes, the bigger the physical challenge of keeping all that computing power running. The first stock on our list is Vertiv Holdings Company, ticker symbol VRT. Vertiv is interesting because while investors spend enormous amounts of time thinking about artificial intelligence software and advanced computing, there is another side of the AI revolution that cannot be ignored. AI requires physical infrastructure, and increasingly enormous amounts of it. Every new generation of artificial intelligence demands more computing power. More computing power means more electricity flowing through data centers, greater power density inside server racks, more heat being generated, and increasingly difficult engineering challenges around cooling, power distribution, and reliability. That is where Vertiv comes into the picture. Vertiv provides critical digital infrastructure technologies that help data centers operate reliably, including power management, thermal management, liquid cooling, racks, integrated infrastructure, and monitoring systems. That might not sound as exciting as artificial intelligence itself, but think about what happens as AI computing becomes more powerful. The infrastructure surrounding the computing equipment has to evolve with it. Traditional data centers were not originally designed extraordinary power density being created by the newest generation of AI workloads. When companies pack enormous amounts of computing capacity into a relatively small physical footprint, heat becomes a major engineering problem. Power becomes a major engineering problem. Reliability becomes a major engineering problem. And solving those problems is essentially Vertiv's business. That creates what I believe is one of the most compelling parts of the Vertiv investment thesis. Vertiv does not need to predict which artificial intelligence application ultimately becomes dominant. It benefits from the infrastructure required to make increasingly powerful computing possible. As AI workloads become more demanding, advanced cooling systems become increasingly important. Liquid cooling in particular is emerging as a major part of next generation data center architecture because conventional air cooling becomes less effective as computing density rises. Vertiv has been expanding aggressively in this area while simultaneously strengthening its power and integrated infrastructure capabilities. That means the company is positioned around several bottlenecks created by the AI infrastructure boom, rather than depending on just one product category. And the financial performance helps explain why growth investors have been paying attention. The numbers provided for this analysis show Vertiv with a historical earnings per share growth rate of 74.6%. More importantly, projected earnings growth has remained exceptionally strong. The estimates in our reference material call for earnings per share growth of approximately 58% for the year compared with an industry growth rate of only 8.1%. That difference is enormous because when you are evaluating a growth company, you do not simply want to see earnings increasing. You want to determine whether earnings are growing substantially faster than the broader industry, and Vertiv has been doing exactly that. The latest business performance reinforces the broader story. Vertiv recently reported quarterly sales of approximately 3.27 billion dollars representing growth of 24% from the same quarter a year earlier. Operating profit increased 44% while adjusted operating profit climbed share reached $1.52, an increase of 60% year-over-year. But there is another number I think investors should pay particularly close attention to, cash flow. A company can report impressive revenue growth and earnings growth, but eventually investors need to see that growth translating into actual cash generation. And Vertiv has been showing substantial improvement here as well. The reference figures show year-over-year cash flow growth of approximately 41%, significantly above the industry's 10.3% growth rate. Zoom out further and the picture remains impressive. Vertiv's annualized cash flow growth rate over the previous 3 to 5 years was approximately 31.5% compared with an industry average of roughly 8%. And its latest quarterly results took that cash generation to another level. Operating cash flow reached approximately $1.1 billion, while adjusted free cash flow came in around $925 million. That represented year-over-year increases of more than 200% in both measures. Why does this matter? Because rapidly growing cash flow gives Vertiv more flexibility to fund the next phase of expansion. The company can invest in research and development. It can expand manufacturing capacity. It can strengthen its cooling portfolio. It can invest in additional infrastructure solutions. And it can do more of that without relying entirely on outside capital. That becomes especially important when your customers are trying to build infrastructure at enormous scale. Vertiv has already been expanding production capacity to respond to rising demand, including additional manufacturing capabilities designed for high-density data center applications. And this is where the long-term story gets especially interesting. AI infrastructure is not simply about building more data centers. The architecture of those data centers is changing. Power density is rising. Cooling requirements are becoming more complicated. Deployment speed is becoming more important. And operators increasingly need integrated systems capable of supporting massive amounts of computing capacity reliably. In other words, Vertiv's opportunity is not simply tied to the number of data centers being built. It is also tied to how sophisticated those data centers are becoming. That distinction matters. Because even if the rate of new construction eventually normalizes, increasing computing density could continue creating demand for more advanced power and thermal management solutions. Vertiv appears determined to build capacity before that demand arrives. Management has described AI as a long-term secular trend and has been expanding manufacturing capacity across infrastructure solutions, power management, and rack systems. That is exactly what you want to see from a company experiencing structural demand, not simply celebrating today's growth, but investing so it can capture tomorrow's growth. Then we have earnings expectations. One of the most useful signals investors can watch is whether analysts are becoming more optimistic or more pessimistic about a company's future profitability. In Vertiv's case, the direction has been positive. The reference data shows current year earnings estimates rising 5.1% in just 1 month. Looking over a slightly longer period, the consensus estimate increased approximately 6.8% over 60 days. That tells us expectations were moving higher rather than lower. And Vertiv itself has continued raising expectations. Following its latest quarterly performance, the company increased its full-year 2026 guidance across its major financial metrics. At the midpoint, Vertiv now expects approximately $14 billion in full-year sales with organic sales growth of roughly 31% adjusted diluted earnings per share are expected to land between $6.65 and $6.75, representing approximately 60% growth at the midpoint compared with 2025. That is a remarkable growth rate for a company operating at this scale. And this is where investors have to separate the business from the stock price. A great company can still become an expensive stock. Vertiv has already attracted enormous attention because investors recognize its exposure to AI infrastructure. So anyone considering the stock needs to think carefully about valuation and expectations. The supplied figures give Vertiv a PEG ratio of approximately 1.13 compared with 2.55 for the broader industry. The PEG ratio attempts to put a company's valuation into context by comparing its price-to-earnings multiple with its expected earnings growth. It is not a perfect valuation tool, and investors should never rely on one ratio alone, but when a company is producing rapid earnings growth, expanding cash flow, raising guidance, and operating in a structurally growing market, looking at valuation relative to growth can provide useful context. The bigger risk is expectations. When investors expect extraordinary growth, merely delivering good results may not always be enough. Vertiv's recent quarter demonstrated that clearly. Despite strong year-over-year growth and higher full-year guidance, the company's quarterly revenue came in toward the bottom of its own expected range. That is an important reminder that even excellent growth businesses can experience volatility when market expectations become extremely high. Large data center projects can also be complicated. Deployment schedules move. Supply chains experience congestion. Projects can be completed in phases. Revenue recognition can shift between periods. So, investors should not assume Vertiv's growth will occur in a perfectly straight line. The question is whether those quarterly fluctuations change the underlying long-term demand picture. Right now, the evidence suggests the structural opportunity remains significant. The company continues expanding manufacturing capacity. It continues strengthening its thermal management capabilities. It continues investing around high-density computing. And most importantly, earnings and cash generation continue growing rapidly. That brings us to what I consider Vertiv's real competitive advantage. The company is becoming deeply positioned inside the physical architecture required for high-performance computing. Customers building enormous AI infrastructure cannot simply install computing equipment and switch it on. They need reliable power. They need power distribution. They need thermal management. They increasingly need liquid cooling. They need racks and integrated systems. And they need infrastructure capable of operating continuously under extraordinary workloads. Those requirements create an ecosystem where experience, engineering expertise, product breadth, and the ability to deploy infrastructure at scale matter enormously. That does not make Vertiv immune from competition, but it does create barriers that are much harder to replicate than simply launching another software product. And if AI computing continues becoming more power intensive over the next decade, those barriers could become even more valuable. So, when I look at Vertiv as an August growth stock, I see three major pillars supporting the investment case. First, explosive earnings growth. Second, rapidly expanding cash generation. And third, exposure to an infrastructure problem that may become more difficult as artificial intelligence becomes more powerful. The company has earned a growth score of A in the data supplied for this analysis, while earnings estimates have continued moving higher. But ultimately, the rating itself is not what makes Vertiv interesting. The underlying economics do. If artificial intelligence continues requiring dramatically more computing capacity, data centers will need dramatically more sophisticated physical infrastructure, and Vertiv is positioning itself to provide that infrastructure. That does not guarantee the stock will move higher every quarter. It does mean investors looking for growth beyond the most obvious corners of artificial intelligence have a compelling business to study. Because sometimes the biggest opportunities during a technological revolution are not only found in the technology everyone is talking about. They are found in the infrastructure the revolution cannot function without. And Vertiv is becoming one of those infrastructure businesses. If this resonates with you, you're exactly who this channel is for. Please hit the like button, share the video, and leave your thoughts in the comments. Subscribe to the channel so you don't miss out on the next important financial investing update. Remember to do your own research before you invest in any stock. The second stock on our list is Invista Holdings Corporation, ticker symbol NVST. And what makes Invista interesting is that this is not the kind of growth story that necessarily dominates financial headlines every day. Instead, Invista operates inside something far more fundamental, dental care. The company provides a broad range of dental products, technologies, and services used by dental professionals around the world. Its portfolio reaches across orthodontics, implants, imaging systems, diagnostics, and other dental technologies that help clinicians diagnose and treat patients. And the scale of this business is easy to underestimate. Envista says its products and solutions can be found in approximately 90% of dentists' offices, while more than 1 million dental professionals rely on its technology every day. The company operates across more than 120 countries and has a portfolio of more than 30 established brands. That gives Envista something growth investors should always pay attention to. Distribution. In healthcare, having a good product is important, but having relationships with professionals who already know your products, understand your technology, and use your systems every day can be enormously valuable. Dental professionals do not necessarily want to constantly replace familiar equipment, retrain employees, and rebuild workflows every time another manufacturer introduces a competing product. That can create customer relationships that become increasingly valuable over time. But, there is another reason the dental market deserves attention. Dentistry itself is becoming increasingly digital. Imaging is improving, treatment planning is becoming more sophisticated, orthodontic workflows are becoming more digitally integrated. Dental practices increasingly want technology that improves accuracy, efficiency, and the patient experience. And that transition creates opportunities for companies capable of combining established dental brands with increasingly sophisticated technology. Envista has been positioning itself around exactly that opportunity. But, this is where the story becomes more interesting. Envista is not simply a traditional healthcare company producing steady, but unremarkable growth. The business has recently been showing signs of improving operational momentum, and the latest numbers demonstrate that. Envista recently reported second quarter sales of approximately $731 million. Core sales increased 5% from the same period last year. At first glance, 5% growth might not sound extraordinary compared with some of the explosive technology businesses investors follow, but revenue growth alone does not tell the story here because underneath that sales growth, profitability improved dramatically. Adjusted EBITDA reached approximately $108 million, increasing 28% year-over-year. Adjusted EBITDA margin expanded by approximately 230 basis points to 14.7% and adjusted diluted earnings per share reached 41 cents. That represented approximately 58% year-over-year growth. Think about that combination. Core revenue increased 5%, adjusted EBITDA increased 28%, adjusted earnings per share increased is happening beneath the surface. Envestnet is converting relatively moderate top-line growth into much faster bottom-line growth, and that is exactly the kind of operating leverage growth investors should be looking for because sometimes the most interesting opportunity is not the company already growing revenue at an extraordinary rate. Sometimes it is the company whose underlying business is improving enough that profits begin growing dramatically faster than sales. Envestnet appears to be moving through that kind of transition. The company entered 2026 with momentum already building. During the first quarter, sales reached approximately $706 million, and core sales increased 9.5%. Adjusted earnings per share increased 50% year-over-year to 36 cents. Management also reported growth across its major businesses while continuing to invest more heavily in research and development, sales, and marketing. Then the second quarter continued the trend. Core sales growth slowed from the unusually strong first quarter pace, but profitability continued expanding rapidly. And when you put the first 6 months together, Envista generated approximately 7% core sales growth. That matters because it suggests the business is not relying entirely on cost reductions to produce better earnings. There is actual underlying growth supporting the margin improvement. And one particularly important part of the portfolio has been the company's equipment and consumables operation. That segment generated approximately 8.5% core sales growth during the second quarter. This is where investors need to understand the bigger picture. Dental technology is not a market where every product purchase happens once and disappears. Equipment creates relationships. Consumables create recurring demand. Imaging systems can become part of the workflow inside a dental practice. Orthodontic products can become part of treatment protocols. And when a company has a broad portfolio across these categories, it has opportunities to deepen its relationship with dental professionals over time. That creates a different kind of moat. It is not necessarily the network effect you might see in a technology platform. It is a combination of brand recognition, installed equipment, professional familiarity, distribution, clinical trust, and product breadth. And when you have products already reaching an enormous percentage of dental practices, those advantages become difficult to ignore. This is one reason Envista's recent improvement deserves attention. The company already had scale. The question was whether management could turn that scale into stronger growth and better profitability. The latest results suggest progress is being made, and the earnings expectations are beginning to reflect that improvement. The figures provided for this analysis show the consensus estimate for Envista's current year earnings increasing approximately 7.8% over a 60-day period. That is significant because analyst estimates tend to respond to changes in the underlying trajectory of a business. When estimates are falling, it can signal deteriorating expectations. When estimates are moving higher, it suggests analysts are becoming more confident about future profitability, and Envista's estimates have been moving in the right direction. The company has also raised its own outlook following the latest quarter. Management now expects adjusted earnings per share for 2026 of approximately $1.50 to $1.55. The company also increased its expected core sales growth range to approximately 3.5% to 4.5% for the year. Again, the revenue growth rate itself might not look spectacular, but that is why investors need to look deeper. This story is increasingly about profitable growth. If Envestnet can produce mid-single-digit organic growth while simultaneously expanding margins and growing earnings substantially faster, the economics of the business can improve significantly. That is especially true if management can continue improving execution. And there is another encouraging signal. Cash generation has also strengthened. Improving cash flow gives Envestnet additional flexibility to invest in product development, commercial expansion, and strategic priorities while also returning capital to shareholders. Earlier this year, management announced an incremental $300 million share repurchase authorization. That is worth paying attention to because buybacks become particularly interesting when management believes the market is undervaluing the future earnings power of the business. Of course, repurchasing shares only creates meaningful long-term value when the underlying company continues improving. And that is why the operational progress matters so much. This is not simply a financial engineering story. Envestnet has been increasing investment in areas such as research and development and sales and marketing while simultaneously improving profitability. That combination is important. A company can temporarily boost margins by cutting investment, but eventually those cuts can weaken future growth. The more compelling situation is when a business improves efficiency while continuing to invest behind its strongest opportunities. That appears to be the direction Envestnet is trying to move. Now, let's talk valuation because this is another area where the stock becomes interesting. The reference data gives Envestnet a PEG ratio of approximately 1.34. The broader industry comparison sits around 2.47. That does not automatically mean Envista is cheap. No single valuation metric can tell you that. But it does suggest investors are not necessarily paying the same premium relative to expected growth that they may be paying elsewhere in the industry. And that creates an interesting setup. You have a company with an enormous global dental footprint. You have improving organic growth. You have expanding margins. You have earnings growing dramatically faster than revenue. You have analyst earnings expectations moving higher. And you have a valuation metric that, based on the supplied figures, sits considerably below the industry comparison. That combination is why Envista carries a growth score of B in the reference material. But there are risks investors should understand. Dental spending is not completely immune to economic pressure. Some procedures are essential. Others can be postponed. Higher cost treatments can be influenced by consumer confidence and household finances. Dental practices themselves can delay equipment purchases when economic uncertainty increases. So this is not a business where demand moves upward in a perfectly predictable line. There is also execution risk. Envista has a large portfolio, and turning that portfolio into consistently stronger margins requires management to maintain operational discipline. The recent improvement is encouraging. But investors should watch whether margin expansion continues and whether the company can sustain organic growth after the strong first half. That is particularly important because expectations are now rising. Once analysts begin raising earnings estimates and management raises guidance, the company has to execute against those higher expectations. But there is a larger structural reason I think Envista deserves attention. People will continue needing dental care. Populations will continue aging. Dental professionals will continue adopting better diagnostic technologies. Digital workflows will continue becoming more important. Patients will continue demanding more sophisticated treatments. And dental practices will continue looking for technologies capable of making those treatments more efficient and predictable. Envista does not have to create that demand from scratch. It already operates inside the ecosystem serving it. The opportunity is to capture more value from that ecosystem. That is a very different growth thesis from the first company we discussed. Vertiv is benefiting from extraordinary infrastructure investment surrounding artificial intelligence. Envista is benefiting from the modernization of an enormous health care category. One is about powering and cooling increasingly sophisticated computing infrastructure. The other is about providing increasingly sophisticated tools and technologies to dental professionals. But underneath those completely different industries is something these companies have in common. Both are positioned around infrastructure their customers depend on. And when customers depend on your products to perform critical work, relationships can become sticky. That is where Envista's global reach becomes especially valuable. More than 1 million professional partners already use its technology. Its solutions have a presence in roughly 90% of dentists' offices. That installed footprint creates an enormous foundation from which the company can introduce new products, deepen customer relationships, and potentially increase the economic value of each relationship over time. And if management continues converting that scale into stronger margins, the earning story could become considerably more powerful than the revenue growth rate alone suggests. That is ultimately why Envista makes the list. This is not about chasing the fastest moving stock in the market. It is about recognizing an improving business before the improvement becomes obvious to everyone. Sales are growing. Margins are expanding. Adjusted earnings are accelerating. Earnings estimates have been revised upward. Management has raised its outlook. And the company's established position across the global dental industry gives it a foundation that would be extremely difficult for a new competitor to recreate overnight. For long-term growth investors, that combination deserves attention. Because some of the best growth investments are not businesses starting from zero. They are established companies discovering how to extract significantly more growth and profitability from assets they already have. And Invesco may be entering exactly that phase. This video is brought to you by Value Stocks Investing Master Course. If you're looking to grow your wealth by investing in solid undervalued stocks, but not sure where to start, I created the Value Stocks Investing Master Course to teach you how to identify great companies, make smart investment decisions, and build a portfolio that lasts. Click the link in the description and pinned comments to get the course today and take control of your financial future. So, when we step back and compare the two companies in this video, what makes this list interesting is how differently each business approaches growth. Vertiv Holdings is positioned around the physical infrastructure required to support increasingly powerful computing and artificial intelligence. Envista Holdings is positioned around the modernization of dentistry while improving profitability across an enormous existing professional network. Two completely different industries, two completely different business models, but each one has something growth investors should care about. A durable position inside an important market, improving earnings expectations, and identifiable drivers that could continue creating value beyond the next quarter. The challenge is deciding which competitive advantage you believe has the greatest staying power. Is it Vertiv's position inside the rapidly expanding infrastructure supporting artificial intelligence, or is it Envista's enormous installed presence across the global dental industry and its opportunity to convert moderate revenue growth into much faster earnings growth? That is the question I want you to answer in the comments. Which of these three businesses do you believe has the strongest long-term competitive advantage, and more importantly, why? If you want exclusive stock tips, in-depth analysis, real-time trade alerts, and free investing guides, join the Stocks Galore Patreon today and take your investing game to the next level. Our members get full in-depth analysis on most of the stocks mentioned here. Head over to patreon.com/stocksgalore and become part of our growing community of smart investors. Link is in the description. Do not forget to like the video, share your thoughts in the comments, and subscribe so you do not miss the next important investing update. Thanks for watching, and I will see you in the next one.