With the S&P 500 and Nasdaq Composite hovering near their all-time highs, many investors might be reluctant to add new stocks to their portfolios. After all, Warren Buffett famously told investors to "be fearful when others are greedy and greedy when others are fearful," and a lot of greed is driving many stocks to historically high valuations.

But if you look a bit closer, you can still find some bargain stocks that are trading at discounts to their growth potential. Let's see why three of those stocks -- Lumen Technologies (LUMN -3.17%), Applied Materials (AMAT -0.43%), and Opendoor Technologies (OPEN -2.34%) -- might head a lot higher over the next few years.

Two investors look at a trading screen together.

Image source: Getty Images.

1. Lumen Technologies

Lumen, the telecom company once known as CenturyLink, was in serious trouble at the beginning of 2024. Its revenue had declined for five consecutive years, it had turned unprofitable over the past two years, and it suspended its dividend in 2022. Its free cash flow turned negative, and it ended its latest quarter with $18.1 billion in long-term debt.

Unlike many other telecom companies, Lumen didn't expand into the wireless market to reduce its exposure to the slow-growth wireline market. Instead, it expanded its wireline business, rolled out new fiber plans, and bundled more cloud, security, and collaboration services into its enterprise-oriented plans.

Lumen had expected to generate slow but steady growth with enough cash to cover its dividends. Unfortunately, the rapid deterioration of its business wireline segment offset the stronger growth of its consumer-facing fiber business.

As a result, Lumen's stock plunged under $1 this June. However, its stock soared back to about $6 over the past six months after it struck a series of AI connectivity deals -- including one with Microsoft's Azure -- to upgrade their data centers for the latest AI applications. It's secured $8.5 billion from those deals so far, and those tailwinds could revive its struggling business wireline segment over the next few years.

Lumen isn't out of the woods yet. However, with an enterprise value of $22.8 billion, it trades at less than two times this year's sales. If it gets its act together, its stock could soar higher over the next few years as the AI market expands.

2. Applied Materials

Applied Materials is one of the world's leading suppliers of semiconductor manufacturing equipment. It serves a broad range of customers across the foundry, logic, and memory chipmaking markets.

Its growth accelerated during the pandemic as the top chipmakers expanded their capacity to cope with the supply chain disruptions and chip shortages but cooled over the past three years as it lapped that growth spurt, faced macro challenges, and dealt with tighter export restrictions against China.

Applied Materials' revenue and adjusted EPS only rose 2% and 7%, respectively, in fiscal 2024 (which ended in October). However, analysts expect its revenue and adjusted EPS to grow 9% and 10%, respectively, in fiscal 2025 as the growing demand for AI chips, more power-efficient chips, and denser memory chips generates strong tailwinds for its semiconductor equipment business again. Those are robust growth rates for a stock that trades at just 17 times forward earnings.

Applied Materials' valuations are being squeezed by some concerns regarding its dependence on China, which accounted for 37% of its sales in fiscal 2024. The U.S. Department of Justice (DOJ) has been scrutinizing its sales in China, and its request for CHIPS Act funding (for a new $4 billion R&D facility) was reportedly rejected based on those connections.

Investors should keep an eye on those developments, but Applied Materials has weathered plenty of macro and regulatory headwinds before. If you expect it to overcome these latest challenges, it could be a great time to load up on its stock.

3. Opendoor Technologies

Opendoor is the largest "iBuyer" of homes in America. It makes instant cash offers for homes, fixes them up, and relists them on its own marketplace. That digital approach streamlines the selling process for sellers and buyers, but it's a capital-intensive approach that only flourishes in a hot housing market with low interest rates. Its AI-driven algorithms can also occasionally price its purchased properties incorrectly.

The company's growth accelerated significantly in 2021 as the pandemic headwinds dissipated and the housing market heated up. That momentum continued through 2022, but the rising costs of renovating its properties squeezed its margins.

However, over the following two years, rising interest rates chilled the housing market while increasing its costs for buying and renovating new properties. That pressure drove both Zillow and Redfin to exit the iBuying market in 2022. Its revenue plunged 55% in 2023, and analysts expect another 27% decline this year. It's also expected to stay unprofitable for the foreseeable future.

Those numbers seem grim, but Opendoor's prospects should brighten as interest rates decline and the housing market warms up again. With its biggest competitors now out of the race, it could easily dominate the iBuying market to lock in more buyers and sellers. That's why analysts expect its revenue to rise 22% in 2025 and 29% in 2026. At less than one times this year's sales, Opendoor's stock could rally higher once its near-term headwinds dissipate.