3 Undervalued Growth Stocks to Buy Now

Dynamic growth stocks can be remarkably profitable investments, especially when purchased at opportunistic valuations. For investors on the lookout for these types of profitable situations, Apple , Priceline , and Michael Kors are three companies delivering exciting performance for investors, and they are also trading at convenient prices.

AppleWith a market capitalization of more than $655 billion, Apple is the largest company in the S&P 500 Index by a considerable margin. Case in point:ExxonMobil comes in second place, but the energy giant is still way behind the tech juggernaut, with nearly $396 billion in market capitalization. One might say that size can be a limitation when it comes to growth; however, this did not stop Apple from producing a whopping increase of 20% in earnings per share during the last quarter.

The iPhone is the main driver for Apple when it comes to both sales and earnings, and initial demand for the new iPhone 6 and iPhone 6 Plus models looks quite encouraging, global unit sale-through growth was an impressive 26% in the September quarter.

Source: Apple

In addition, Apple is entering new product categories with Apple Pay and Apple Watch. While it won't be easy for a company with projected annual sales of more than $211 billion to move the needle by much with these new launches, the fact that management is actively focused on innovation is a big positive when evaluating Apple and its ability to continue growing in the future.

Apple is also levering its financial resources to repurchase shares in massive amounts, the company allocated $45 billion to share buybacks during the year ended in September. A reduced share count allows Apple to increase earnings per share at a faster rate than sales, providing a powerful growth engine for investors in the company.

Apple's stock is up by more than 42% year to date, but valuation is still quite attractive. Apple trades at a forward P/E ratio of 14, a significant discount versus an average forward P/E ratio of 18 for companies in the S&P Index according to data from Morningstar.

PricelinePriceline is the growthleader and largest international player in the online travel business, an industry offering exciting opportunities for expansion, as global consumers are increasingly going online for their hotel rooms, plane tickets and car rental reservations. The company owns an undisputed leadership position in Europe, a major destination for travelers around the world; however, currency weakness in the Old Continent could be a drag on performance in the coming quarters.

Fears over macroeconomic headwinds and increased marketing spending are negatively affecting Priceline lately; the stock is down by almost 20% from its highs of the year. On the other hand, it's important to note that performance is still quite impressive and the long term growth story remains intact.

Source: Priceline

Sales during the third quarter increased 25% year-over-year to $2.84 billion, while earnings per share jumped by an even stronger 28%. The business is enormously profitable; Priceline enjoys an operating profit margin in the neighborhood of 47% of sales.

The recent pullback in Priceline stock seems to be providing a buying opportunity for investors, Priceline trades at a forward P/E ratio of 18, quite a moderate valuation for such a strongly performing business. The PEG -- price to earnings growth -- ratio is around 0.8, a general rule of thumb is that companies trading at PEG ratios under 1 are considered undervalued, and this may especially be the case for such a profitable growth company.

Michael Kors Michael Kors is one of the most explosive growth stories in the fashion business. The company is focused on the accessibly luxury segment, particularly oriented toward fashion-conscious consumers, and demand is truly booming: Sales have increased at a mind-blowing 53% annually over the last five years.

Same-store sales growth is naturally slowing down as the company gains size and market share in North America, and this is generating concern among investors. Michael Kors stock has fallen by 26% from its yearly highs, and it's now trading at a forward P/E ratio below 18, in line with the average valuation for companies in the S&P 500 Index.

However, everything seems to be indicating that Michael Kors will outgrow most companies in the index by a considerable margin, and superior growth merits a higher valuation.

Source: Michael Kors

Michael Kors delivered a total increase in sales of 42.7% to $1.1 billion during the last quarter, a level of performance which most competitors can only envy. Comparable store sales grew 16.4%, signaling that demand remains remarkably strong, as new store openings are not hurting sales at existing locations.

Comparable sales in North America increased by 10.8%, a deceleration versus the 18.7% increase reported in the June quarter. However, total sales in North America still grew 29.8% to $802 million, quite an extraordinary performance for a company of its size. Besides, total sales jumped 109% in Europe and 106% in Japan, so global markets look remarkably strong.

Management estimates it has room for over 1,000 Michael Kors stores around the globe, a potential increase of more than 54% versus 649 units as of the end of the third quarter. Considering the company's growth trajectory, this sounds like an achievable target for Michael Kors.

The article 3 Undervalued Growth Stocks to Buy Now originally appeared on Fool.com.

Andrs Cardenal owns shares of Apple, Michael Kors Holdings, and Priceline Group. The Motley Fool recommends Apple, Michael Kors Holdings, and Priceline Group. The Motley Fool owns shares of Apple, Michael Kors Holdings, and Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.