Investing in undervalued companies can be very profitable, especially if the markets have not yet appreciated their growth potential. There are companies that Wall Street has not yet fully rewarded for the positive trends in their businesses, and it is the timely purchase of shares in these companies that can lead to significant returns.

According to some analysts, there are three stocks right now that have the potential to increase their value significantly over the next two years. Which stocks are they?

Carnival is still recovering

Carnival $CCL, one of the largest cruise operators in the world, has recovered significantly since the pandemic, yet its value is still 64% lower than it was five years ago. Although demand for cruises is at record levels and the company's revenues are growing, its profitability has not yet fully recovered. The company's net profit reached $1.7 billion in the third quarter of 2023, but analysts expect it to turn negative again in the fourth quarter.

Another problem facing Carnival is its massive debt, which has grown to nearly $35 billion during the pandemic. The company is gradually paying down that debt, but it will take several more years to reach pre-pandemic levels. Although Carnival expects that its growing free cash flow will be used to pay down debt, the company must continue to invest in its business.

On the positive side are factors such as high demand for cruises with record advances, low interest rates that allow debt to be refinanced on better terms, and growing interest in cruises in the coming years. If the company can resolve its debt and profitability issues, Carnival's shares have great potential to double in value over the next two years.

Pinterest benefits from the growth of digital advertising

Pinterest $PINS, which became a popular platform during the pandemic, now faces increased competition in the digital advertising market. Yet it is experiencing renewed revenue growth thanks to the improved efficiency of its advertising system, which uses artificial intelligence to boost conversions. Pinterest has one big advantage over its competitors: users of the platform often use it to make purchasing decisions, which is very attractive to advertisers.

In the second quarter of 2023, the number of monthly active users grew by 12% to 522 million, with most of this growth coming from international markets, showing great potential for further expansion. With rising margins and competitive valuations, analysts believe Pinterest can significantly increase its profits in the coming years. If it can meet market expectations, the company's stock could rise by as much as 90%, almost double its current value.

Opendoor: betting on a housing market recovery

Opendoor Technologies $OPEN, a home buying and selling firm, has had a tough time. Its stock has lost as much as 95% of its value since its post-IPO peak in 2021, largely due to the post-pandemic housing market slump. However, analysts believe the housing market could rebound, which would bring new opportunities for the company.

The reduction in interest rates and the expected drop in mortgage rates should attract back buyers and sellers, which will increase activity in the housing market. Opendoor could benefit not only from rising home prices, but also from transaction fees on home purchases and sales. If the market improves, the company's stock, which is currently trading below $2 a share, could easily double in value within two years.

Although an investment in Opendoor is riskier, the potential for growth in the event of favorable macroeconomic conditions is high. The company has also already implemented several internal restructurings that should improve its profitability.

Disclaimer: You will find a lot of inspiration on Bulios, but stock selection and portfolio construction is up to you, so always do a thorough analysis of your own.

Source: Yahoo, TheMotleyFool.