In this article, we discuss 5 stocks that analysts say will double. If you want to see more stocks that analysts are monitoring, check out Analysts Say These 3 Stocks Will Double.
Despite facing a tumultuous stock market so far in 2022, some analysts remain bullish on a select basket of stocks. They put forward bold price predictions despite the bear market that seemed to crush many of the most prominent market players, assigning price targets that will require these stocks to double or triple.
The Russell 1000 Index has dropped about 31%, however, analysts forecast rallies of 100% or more for 33 of these companies, and hundreds of names are expected to jump by 50% or above. The median price target stands at 32% higher than the present levels. There are several explanations behind these overly optimistic analyst forecasts. First, experts believe that the recession is putting a damper on market sentiment and the stocks will rebound once the economy starts to recover. Second, stocks that crashed during the peak of the pandemic recovered later in 2021, which is the same hypothesis some analysts apply to the current bear market. Some analysts are also not revising their previously positive guidance as they wait for second quarter earnings to effectively gauge the impact of inflation and rate hikes by the Fed on business performance. In addition to that, the optimism could also be chalked up to denial and inability to accept that they might be wrong after all.
According to Ivan Feinseth, the chief investment officer at the investment advisory Tigress Financial Partners, since earnings for Q2 2022 have not been released yet, the market is selling off due to threats of an economic downturn that may not materialize. Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, said that analysts may be apprehensive about citing lower estimates and revised ratings because if they are wrong, their careers might be impacted negatively.
Keeping the current scenario in mind, analysts believe that stocks such as Coinbase Global, Inc. (NASDAQ:COIN), Carvana Co. (NYSE:CVNA), and Uber Technologies, Inc. (NYSE:UBER) are likely to rebound.
Our Methodology
Bloomberg published a report on June 30, which suggested that compiled consensus price targets reflect that some stocks would double or triple as compared to their current levels. A team of professionals vetted stocks that have tanked so far in 2022, yet their stance remains decidedly bullish. Analysts have made similar predictions in past bear markets as well. For example, in 2009, about 100 stocks were expected to double. Similarly, in 2020, analysts projected that around 300 companies would double after the pandemic settled and many of these companies did rebound after the economy normalized. Some market experts believe that the recession anxiety, paired with a selloff induced by the unsettling macro environment, has caused these securities to crash, rather than actual concerning business fundamentals. This is why they remain optimistic about these companies.
We selected stocks from the Bloomberg report that analysts recently said would double. We have mentioned the business fundamentals, analyst ratings, and hedge fund sentiment around the companies to provide better context to readers.
Analysts Say These Stocks Will Double
5. Novavax, Inc. (NASDAQ:NVAX)
Number of Hedge Fund Holders: 27
Novavax, Inc. (NASDAQ:NVAX) is a Maryland-based biotechnology company that creates vaccines for infectious diseases. The company also put out a vaccine candidate to treat COVID-19. On July 5, Novavax, Inc. (NASDAQ:NVAX) reported that the European Commission has approved the administration of the Nuvaxovid COVID-19 vaccine in the European Union for adolescents aged 12 through 17. As of July 7, the stock has dropped about 50% year to date. However, according to estimated returns, analysts project the company to rank at the top of the Russell 1000 leaderboard. The stock is also expected to surge 193%.
Riley analyst Mayank Mamtani on June 8 reiterated a Buy rating on Novavax, Inc. (NASDAQ:NVAX) with a $181 price target. This came in light of The FDA Vaccines and Related Biological Products Advisory Committee allowing Emergency Use Authorization for Novavax, Inc. (NASDAQ:NVAX)’s COVID-19 vaccine, NVX-CoV2373, for individuals over the age of 18. The analyst thinks the panel discussion “sets up the path for steady adoption initially with vaccine-hesitant but more importantly being part of the fall immunization (booster) campaign among a broad population”.
Among the hedge funds tracked by Insider Monkey, 27 hedge funds were bullish on Novavax, Inc. (NASDAQ:NVAX) at the end of Q1 2022, with collective stakes worth $278.7 million, compared to 30 funds in the prior quarter, holding stakes in the company valued at $476 million. Philippe Laffont’s Coatue Management is a prominent position holder in the company, with 883,446 shares worth $65 million.
Like Coinbase Global, Inc. (NASDAQ:COIN), Carvana Co. (NYSE:CVNA), and Uber Technologies, Inc. (NYSE:UBER), analysts say that Novavax, Inc. (NASDAQ:NVAX) will likely double.
4. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 44
Peloton Interactive, Inc. (NASDAQ:PTON) was founded in 2012 and is headquartered in New York. The company manufactures and sells interactive fitness products, offering the option of streaming live and on-demand workout classes. The stock has nosedived about 70% year to date as of July 7. Its average price target has fallen to $21 from $74 this year alone, and reaching even the significantly lower estimate requires the stock to double in price. At the end of June, investment advisory UBS said that Planet Fitness is the top workout application in the United States and Canada, while Nike Run Club has the highest number of users in the UK and Germany, eating away Peloton Interactive, Inc. (NASDAQ:PTON)’s market share notably.
JPMorgan analyst Doug Anmuth on June 29 reiterated an Overweight rating on Peloton Interactive, Inc. (NASDAQ:PTON) but lowered the price target on the shares to $20 from $24. The analyst slashed estimates and price targets in his interest coverage due to macro challenges, currency moves, and company-specific dynamics. However, he thinks buy-side expectations and many stock prices “already reflect a softer macro environment”.
According to Insider Monkey’s data, 44 hedge funds reported long positions in Peloton Interactive, Inc. (NASDAQ:PTON) at the end of Q1 2022, compared to 60 funds in the earlier quarter. Alkeon Capital Management featured as one of the top stakeholders of the company, with 3.5 million shares worth about $94 million.
In addition to Peloton Interactive, Inc. (NASDAQ:PTON), analysts expect Coinbase Global, Inc. (NASDAQ:COIN), Carvana Co. (NYSE:CVNA), and Uber Technologies, Inc. (NYSE:UBER) to double.
Here is what Merion Road Capital has to say about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q1 2022 investor letter:
“Given what I have discussed so far you might be surprised that I built a new position in Peloton (“PTON”). PTON has had a rollercoaster ride in the public markets. Following their 2019 IPO at $29 the stock rocketed to over $160 at the peak of the covid hype, before tanking to its current price in the mid‐$20’s. The company has basically checked the box on any negative event you could think of. A few standouts include cutting guidance (May 2021, November 2021, January 2022), major strategic gaffes (overbuilding supply capacity, flip-flopping on price cuts), and poor/misleading communication (raising capital 2 weeks after stating there was no need to raise capital). So why would I own this?
Peloton (the product, not the stock) has a strong brand name, value proposition, and customer loyalty. Despite their woes the company has built an established base of users that should be highly valued. The market is currently telling us that their 2.7mm users are worth $2,600 per subscriber, or just 7.5x subscription gross profit. Simplistically this assumes 1/7.5x = 13% annual attrition which is more draconian than current levels of ~10% (of course giving no credit for future growth)…” (Click here to see the full text)
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Disclosure: None. Analysts Say These 5 Stocks Will Double is originally published on Insider Monkey.
