Wall Street Expects These 3 Stocks to Gain Over 100% In the Next Year
April 23 2021 - 11:36AM
Finscreener.org
Since the markets bottomed out in March 2020,
investors have experienced an unprecedented rally primarily driven
by strong performance in technology stocks. Since March 23, 2020,
the
S&P 500 is up 86% while the tech-heavy NASDAQ more than
doubled from the bear market depths.
While these major indices are trading near
record highs, a few stocks continue to trade a massive discount
compared to analyst consensus price targets.
Here, we look at three such stocks that you
can consider for market-beating gains right now.
Nikola
The first stock on the list is electric
vehicle (EV) manufacturer Nikola (NASDAQ: NKLA).
While stocks in the EV space were on an absolute tear in 2020, most
of them have underperformed the market this year. Investors and
analysts are concerned over steep valuations as well as rising
competition for companies in the EV sector.
Nikola stock is currently trading at $9.65
which is close to 90% below its all-time high of $93.99. Analysts
have a 12-month average target price of $26.17 for NKLA stock which
is 170% above its current trading price.
In the last few months, Nikola founder Trevor
Milton was forced to step down after the company was probed by the
SEC (Security and Exchange Commission). Further, its investment
deal with auto giant General Motors (NYSE: GM)
failed to materialize which contributed to the pullback. Nikola
also raised $100 million via a new stock offering this March which
diluted shareholder wealth.
However, long-term tailwinds including a
worldwide shift towards clean-energy solutions make companies in
the EV segment a high-risk high-reward proposition.
Paul Coster, an analyst from J.P. Morgan
(NYSE: JPM),
lowered his 12-month price target on Nikola to $30 from $33 and
downgraded his rating from “Overweight” to “Neutral”. However,
Jeffrey Kauffman from Vertical Research initiated coverage on
Nikola stock with a “buy” rating and a price target of
$24.
Nikola is optimistic about its ability to
gain traction in the EV-based trucking industry. It is still a very
young company and will look to ramp-up manufacturing as well as
automobile deliveries going forward.
Skillz
The second stock on the list is
Skillz (NYSE: SKLZ), a
mobile games and eSports entity that went public via a SPAC
(special
purpose acquisition company) in December 2020. Skillz stock is
currently trading at $12.55 which is 144% lower than its 12-month
average target price of $30.67.
Skillz has developed a platform that enables
gamers to compete and win cash and other prizes. It also allows
game developers to keep a percentage of these prizes to host the
games. It is basically an intermediary and does not have to spend
millions on game development allowing it to enjoy a gross margin of
almost 95%.
Earlier this year, Skillz signed a multi-year
agreement where developers will compete to launch NFL-themed games
on its platform. Wall Street expects the company to grow sales from
$230 million in 2020 to $1 billion in 2024.
Plug Power
Another company that is part of the highly
disruptive EV space is Plug Power (NASDAQ: PLUG).
It provides hydrogen fuel cell turnkey solutions for electric
mobility markets in North America and Europe. Plug Power focuses on
PEM (proton exchange membrane) fuel cell and processing
technologies.
It offers a hydrogen-based PEM fuel cell
system known as GenDrive that provides power to material handling
EVs. The GenFuel is a hydrogen fueling delivery, generation,
storage, and dispensing system while GenCare is a service and
maintenance program.
PlugPower offers products to retail
distribution and manufacturing businesses via a direct product
sales force, dealer networks and OEMs (original equipment
manufacturers). This stock is currently trading at $25 which is
120% below its 12-month price target of $55.
PlugPower has already announced two joint
ventures this year. It has partnered with SK Group where the latter
has a 10% equity stake in PlugPower. The two companies will focus
on developing hydrogen fuel-cell solutions for the South Korean
market. Plug Power’s JV with Renault will be aimed at gaining
traction in the light commercial EV market in Europe.
The final
takeaway
We can see that the three stocks on the list
are part of rapidly growing markets. However, these investments
also carry significant risks given the rise in competition and
regulatory issues surrounding these companies.
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