A deeper scan of the markets will often reward investors with undervalued sleeper stocks to buy. These are the very stocks that are fundamentally sound and have an attractive business model. And yet, many of these stocks have still not caught the eye of investors. Eventually, they will.  And I believe that some of the top sleeper stocks will be poised for multi-bagger returns. I also believe these ignored stocks have a clear valuation gap. That being said, let’s jump into seven of the undervalued sleeper stocks to buy today.

Undervalued Sleeper Stocks to Buy: Scorpio Tankers (STNG)

Scorpio Tankers (NYSE:STNG) is one of the top undervalued sleeper stocks to buy. At the moment, it trades at a forward price-earnings ratio of 4.3, with an attractive yield of 2.12%. As an overview, Scorpio is a leading provider of product tankers for refined petroleum products. The company has one of the largest product fleets in the world with 113 eco-vessels that have an average age of 7.2 years.

In addition, in its third quarter, Scorpio reported revenue of $384.4 million, which was higher by 121% on a year-on-year basis. Further, operating income was $231 million as compared to the prior year period operating losses. With healthy day rates, Scorpio is a cash flow machine. Given the robust numbers, the company increased its quarterly dividend by 25% to 25 cents.

Also, with strong cash flows, the company has deleveraged and boosted its cash buffer. It’s worth noting that for every $10,000 increase in day rate, the company anticipates an increase of $412 million in cash flows. With a strong tanker market, the outlook is promising.

MINISO Group (MNSO)

MINISO Group (NYSE:MNSO) is a Chinese company that engages in the retail and wholesale of lifestyle products. MNSO stock has witnessed a significant rally in the last 12 months. However, it remains under the radar of investors, even with an attractive forward price-earnings ratio of 19.7.

In my view, there are two major reasons to like this stock. For one, the company reported 5,440 stores as of Q2 2023. Of this, 2,115 stores were outside China. The company has also expanded into Asia, Latin America, Europe, and the Middle East. Last year, new store openings were 395. With aggressive new store openings globally, the outlook for revenue growth is robust.

Further, the company’s gross margin for Q2 2023 was 40%. On a year-on-year basis, the gross margin expanded by 890 basis points. Newly launched products and cost savings contributed to gross margin expansion. With operating leverage, I expect margin expansion to sustain.

Amdocs (DOX)

Amdocs (NASDAQ:DOX) is another one of the top undervalued sleeper stocks to buy for multi-bagger returns. With a forward price-earnings ratio of 16, the 1.8% dividend yield stock can deliver multi-bagger returns in the next few years.

There are two major reasons to like DOCS. First, the company is a provider of software services and solutions to the telecommunications and media industry globally. By 2025, the company expects the total serviceable market to be $57 billion. Therefore, there is huge potential for growth acceleration.

In addition, Amdocs’ business is a cash flow machine. Last year, the company reported free cash flow in excess of $600 million. For the current year, FCF is expected to be $700 million. Given the industry outlook, FCF will be in excess of $1 billion in the next 24 months. With strong financial flexibility, Amdocs will be positioned for aggressive organic and inorganic growth. Recently, the company acquired the service assurance business of TEOCO for a consideration of $90 million in cash.

Leonardo DRS (DRS)

Leonardo DRS (NASDAQ:DRS) is another top sleeper stock poised for growth. The emerging player in the defense sector looks undervalued even after a rally of 25% for year-to-date 2023. As an overview, the company’s focus areas include advanced sensing, network computing, force protection, and electric power & propulsion. Last year, the company reported revenue and EBITDA of $2.75 billion and $323 million respectively.

In addition, an order backlog of $4.3 billion provides clear revenue visibility. Further, with a net-leverage ratio of 1.5, the company has ample financial flexibility for organic and acquisition-driven growth. Also, Leonardo won the 2023 Herschel Award for its role in the development of advanced infrared detectors. Innovation is the key factor that’s likely to drive business scalability in the coming years.

Ardmore Shipping (ASC)

Ardmore Shipping (NYSE:ASC) stock is another undervalued name flying under the radar. To put things into perspective, the 6.72% dividend yield stock trades at a forward price-earnings ratio of 3.8. I would not be surprised if ASC stock doubles in the next 12 months.

The company is involved in the seaborne transportation of petroleum products and chemicals globally. A key reason to be bullish is positive industry tailwinds. The company’s MR tankers earned $37,500 per day in Q1 2023. With cash breakeven at $14,500 per day, the EBITDA margin was robust. Even for Q2 2023 (to date), the time charter rate has been strong at $34,000.

Even beyond Q2, time charter rates are likely to remain strong. One reason is European Union refined product embargo. This has resulted in route inefficiencies and higher tonne-miles. Overall, Ardmore has a strong balance sheet and liquidity buffer. With cash flow visibility, there is headroom for sustained dividends, deleveraging, and fleet expansion.

Aker BP ASA (AKRBF)

An undervalued sleeper stock that deserves attention is Aker BP ASA (OTCMKTS:AKRBF). With a price-earnings ratio of 9.9, the stock also offers a dividend yield of 9.6%. In addition, Aker BP is a value creator, with high-quality oil assets with a low break-even point. To put things into perspective, Aker reported revenue of $3.3 billion for Q1 2023. For the same period, EBITDA was $2.9 billion. This has translated into operating cash flow after tax of $1.7 billion. Even with oil trading around $70 to $80, the company is positioned to deliver annualized OCF of $7 billion. This provides ample headroom for dividend growth and aggressive investment in exploration activity.

Bitfarms (BITF)

Let’s also talk briefly about the penny stock Bitfarms (NASDAQ:BITF). Thanks to a brutal crypto winter, investors have stayed away from miners, like BITF.  However, with the price of Bitcoin (BTC-USD) expected to come back strong, it could eventually boost the BITF stock. In fact, I believe BITF could deliver 5x or 10x returns if Bitcoin trades near all-time highs in the next 12 to 24 months.

One reason to like Bitfarms is the fact that the company is a low-cost Bitcoin miner. For Q1 2023, the company reported revenue and EBITDA of $30.1 million and $6.3 million respectively. I expect EBITDA margin expansion to sustain. Another reason to like the company is its aggressive mining capacity expansion. As of April, Bitfarms reported a capacity of 5EH/s. On a year-on-year basis, capacity expanded by 52%. With a deleveraged balance sheet, Bitfarms is positioned for further growth.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.