3 multi-baggers the market is mispricing now

Spent part of Tuesday morning going through Q1 earnings transcripts. The same pattern keeps showing up: sell-offs driven by GAAP line items while free cash flow quietly doubles. The market's doing the heavy lifting for us right now. That's where this issue starts.

The market has punished MercadoLibre (MELI) and Sea Limited (SE) this year for the same reason: both companies are spending aggressively, and investors hate that. Both sell-offs appear driven by concern over growth investment spending rather than deteriorating fundamentals. That distinction matters enormously.

MercadoLibre is down roughly 30% from its 52-week high of $2,645. The stock got hit 11% in a single session after Q1 2026 earnings, even though free cash flow came in at $1.8 billion for the quarter, more than double the $759 million it generated in Q1 2025. The GAAP earnings line missed. Free cash flow did not. Meanwhile, full-year 2025 revenue grew 39% to $28.9 billion and operating cash flow reached $12.1 billion, up 53% year-over-year. The bear case is entirely about timing. The bulls are betting Latin America's offline-to-online transition is nowhere near done, and the credit card book hasn't matured yet. Those are patient capital bets, not broken thesis alerts.

Sea Limited tells a similar story from Southeast Asia. Q1 2026 revenue came in at roughly $7.1 billion, 47% higher year-over-year and ahead of market expectations, with adjusted EBITDA crossing $1 billion for the first time. Shopee delivered 30% GMV growth. Garena posted its strongest bookings since 2021. And Sea sits on roughly $11 billion in net cash, worth about a quarter of its entire market cap. That cash cushion is not a small detail. It funds buybacks, lending expansion, and strategic flexibility without touching equity markets. Both stocks are trading on fear. The underlying businesses are not broken.

NuScale Power (SMR) holds something genuinely rare: it is the only small modular reactor developer with a design approved by the US Nuclear Regulatory Commission, and it has that approval for not one but two designs. Its stock is down almost 70% from its six-month high. Its market cap sits at roughly $4 billion. For context, rival Oklo, which does not yet have NRC approval and has never operated a reactor commercially, carries a market cap about three times larger.

The obvious risk: NuScale has yet to generate revenue from an SMR sale. That's the bear case in one sentence. The bull case is structural. Bank of America describes SMRs as potentially 'one of the most consequential energy technologies for the next 25 years,' putting the total market opportunity at $10 trillion. NuScale's first commercial project, a 426 MWe plant in Romania, is targeting early 2030s operations. The US government wants to quadruple nuclear capacity from 100 GW to 400 GW by 2050. NuScale is the company that already has the regulatory runway to participate. Whether it converts that into binding contracts before it runs out of cash is the entire question. That's not a comfortable position, but it's not a broken position either.

Morgan Stanley Research forecasts US data centre demand reaching 74 GW by 2028, with a projected shortfall of roughly 49 GW in available power access. To put that gap in context: the entire existing US data centre sector draws less than 15 GW today. The shortfall alone is more than three times current total capacity. Gartner predicts power shortages will restrict 40% of AI data centres by 2027. This isn't a demand story. It's a supply story, and the supply side is where the multi-bagger potential lives.

Oklo (OKLO) trades at roughly three times NuScale's market cap. Oklo has no NRC approval for its liquid sodium-cooled design, no commercial reactor operating, and no firm revenue. NuScale has two NRC-approved designs and a first project under development. The market has decided the story matters more than the asset. That's not unusual — early-stage energy investing often rewards narrative over substance. But it does mean one of these two valuations is probably very wrong.

The sceptical read on NuScale is fair: no binding contract closed yet, a first Idaho project that was cancelled before reaching a final investment decision, and a cash burn clock ticking. The bullish read is equally fair: regulatory moat that took 15 years and hundreds of millions to build, a $10 trillion addressable market per Bank of America, and a stock price that already reflects most of the bad news. Sometimes the least popular version of a good idea is the right one to own.

NuScale reported Q1 2026 results this week. Here's how the market is reading it.

Re-reading Peter Lynch on what makes a ten-bagger. His answer, roughly: a company so boring or misunderstood that institutions won't touch it. NuScale down 70% with the only approved SMR design in America is starting to fit that description uncomfortably well.