Eroad Ltd: Discovering the ASX Growth Stock to Watch for Multibagger Potential

Rarely will a growth stock on the ASX look 'cheap' when it's on the brink of profitability. Discovering hidden multibagger potential in the stock market can be a challenge, requiring patience and perseverance. Uncovering undervalued opportunities in growing companies like Eroad Ltd (ASX: ERD) can lead to significant gains in the long run.

As a fleet management technology company, Eroad is bridging the gap between burning cash and generating revenue. With a positive free cash flow of $1.3 million in FY24 and strong revenue growth, the company is positioning itself for profitability. Analyst forecasts suggest that Eroad's net profit after tax (NPAT) could reach NZ$10.6 million in FY26 and NZ$24.4 million in FY27. This potential growth trajectory could make Eroad a lucrative investment, with the ASX growth stock possibly becoming a four-bagger in three years if trading at a 30 times price-to-earnings (P/E) ratio.

Despite its promising outlook, Eroad faces risks, such as a significant increase in share dilution since 2020. Monitoring this trend will be crucial, but the company's positive free cash flow is a reassuring sign of its financial stability and growth potential.