In a bull market, the rally in stocks is broad-based. Even fundamentally weaker stocks trend higher in sync with market sentiments. However, when there are multiple macroeconomic headwinds, it’s unlikely that the bull market will be back in 2023. Having said that, I believe that it’s a year of careful stock selection. Undervalued blue-chip and growth stocks are likely to surge even if the market is sideways. The focus of this column is on growth stocks that can double in 2023.

Last year was worth forgetting for growth stocks. With earnings revision on the downside coupled with tight monetary policies, the best-of-growth stocks took a plunge. It, however, seems that most growth stocks have discounted valuation concerns. Further, panic selling has translated into an attractive entry point in selected growth stocks.

Let’s talk about seven growth stocks that can double in 2023 as they reverse from oversold levels.

Nio (NIO)

Nio (NYSE:NIO) stock has corrected by almost 50% in the last six months. A renewed surge in covid cases in China coupled with economic growth concerns have impacted sentiments. However, considering the headwinds, Nio has continued to report healthy deliveries. With several catalysts in 2023, NIO stock is poised for a strong comeback.

For Q4 2022, Nio reported vehicle delivery of 40,052. On a year-on-year basis, deliveries surged by 60%. I believe that strong delivery growth will sustain through 2023. There are two reasons for this view.

First, Nio plans to launch five new models in the first half of 2023. With a diversified portfolio of eight models, delivery growth is likely to remain strong.

Further, Nio plans to have a presence in 25 countries by 2025. Throughout the year, the company will be expanding in Europe. International expansion will support growth.

With operating leverage, EBITDA margin expansion also seems likely. It’s also worth noting that Nio has a strong cash buffer to continue investing in product development and aggressive expansion.

Polestar Automotive (PSNY)

Another electric vehicle stock that looks attractively valued is Polestar Automotive (NASDAQ:PSNY). After a correction of 45% in six months, PSNY stock looks poised for a reversal rally, with business developments remaining positive.

Last year, Polestar delivered 51,500 cars, which was higher by 80% yearly. The company has also guided the delivery of 80,000 cars in 2023. The target seems realistic with Polestar 3 deliveries commencing. Additionally, Polestar 4 will be launched. These catalysts will ensure that PSNY stock creeps higher.

It’s worth noting that Polestar has a presence in 27 markets globally. With a strong global presence, the addressable market is significant. Operating level losses have, however, widened in 2022. That was expected with Polestar still at an early growth stage. I expect EBITDA level losses to narrow in the current year. Polestar is also fully financed through 2023.

Overall, Polestar has a portfolio of model launches through 2026. The long-term outlook is positive, supported by industry tailwinds.

Transocean (RIG)

Transocean (NYSE:RIG) stock has already surged by 78% in the last six months. It’s a good example of the returns that oversold stocks can deliver even in bearish market conditions. As business developments remain positive, RIG stock is among the growth stocks that can double in 2023.

Overall, Transocean is a provider of modern rigs for offshore drilling. As oil sustains at higher levels, offshore drilling activity has been robust. Transocean is positioned to benefit as the company’s order backlog continues to swell.

At the beginning of January, Transocean reported an order backlog of $8.3 billion. With some recent awards and contract extensions, the backlog has swelled by $8.8 billion. The backlog provides clear revenue and cash flow visibility. Also, with new contracts at a higher day rate, Transocean is positioned for EBITDA margin expansion in 2023 and beyond.

As visibility for cash inflows increases, Transocean is also targeting to deleverage. As the company’s credit profile improves, RIG stock is likely to remain in an uptrend.

Leonardo DRS (DRS)

Defense stocks are likely to remain an attractive investment theme in the coming years. Leonardo DRS (NASDAQ:DRS) stock looks interesting among growth stocks. DRS stock has also been in an uptrend, with a rally of 35% in six months. With the merger of Rada Electronic and Leonardo complete, the outlook is bullish.

As an overview, Rada Electronic is a provider of tactical radar. Leonardo provides advanced defense electronic products and technologies. The combined entity reported proforma revenue of $2.7 billion for 2021.

Leonardo believes that the total addressable market for its products and services is around $25 billion. There is ample headroom for growth as defense spending remains high globally. It’s also worth noting that the merged entity has a net-debt-to-adjusted EBITDA of 0.7. Financial flexibility is high to pursue investment in innovation.

Overall, DRS stock seems to be among the hidden gem growth stocks. I will not be surprised if the stock doubles in a quick time.

Curaleaf Holdings (CURLF)

Among cannabis growth stocks that can double, Curaleaf Holdings (OTCMKTS:CURLF) is a top pick. Federal-level legalization of cannabis remains an elusive catalyst. If this catalyst plays out, multibagger returns can be expected.

However, even if there is no legalization in 2023, CURLF stock looks attractive after correcting by 50% in 12 months. Business developments have been encouraging, and the company is focused on research and development.

It’s worth noting that Curaleaf is already present in 21 states in the U.S. Additionally, the company is expanding its presence in Europe. This will help in boosting revenue growth.

However, there are two more important reasons to like Curaleaf. First, the company has reported positive adjusted EBITDA on a sustained basis. Further, Curaleaf is investing heavily in R&D. In Q3 2022, 18% of the company’s revenue was from new products launched in the last 12 months. The company has a pipeline of 15 new products for launch. This will ensure top-line growth and potential margin expansion.

Riot Platforms (RIOT)

The best time to buy stocks is when there is blood on the streets. This holds true for Riot Platforms (NASDAQ:RIOT), with the stock plunging on Bitcoin (BTC-USD) correction. However, Riot is fundamentally strong, and I am bullish on the crypto stock for 2023.

For Bitcoin miners, it’s about surviving the extended crypto winter. With $255 million in cash, digital assets, and zero debt, Riot has a strong balance sheet.

Further, Riot has continued to expand its mining capabilities. As of December 2022, the company had a hash rate capacity of 9.7EH/s. The company expects to boost capacity to 12.5EH/s by Q1 2023. With mining capacity expansion, the company’s digital assets will continue to swell.

Another advantage for Riot is that the company is a low-cost miner. For the first nine months of 2022, Riot reported a gross margin of 65.4%. Once Bitcoin trends higher, Riot is positioned to deliver healthy cash flows.

Therefore, RIOT stock is a high-risk bet worth considering at current levels for possible 100% returns in 2023.

Coupang (CPNG)

Coupang (NYSE:CPNG) stock is another name among growth stocks that’s likely to double in 2023. The e-commerce company has the worst behind it in terms of cash burn. With steady user growth and positive adjusted EBITDA, CPNG stock looks undervalued.

For Q3 2022, Coupang reported revenue growth of 27% on a year-on-year basis (FX-neutral basis). For the same period, Coupang reported a positive adjusted EBITDA of $195 million. With operating leverage, EBITDA margin expansion is likely to continue through 2023. For the long term, Coupang has guided for an EBITDA margin in the range of 7% to 100%. This is a key reason to be bullish.

It’s also worth noting that Coupang has a big addressable market. Even in Korea, the company is catering to only 50% of the total active customers. There is ample headroom for penetration, and this would imply steady revenue growth. With high financial flexibility, Coupang is also positioned for growth through international expansion.

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.