The stock market is never a sure thing, with even the most seasoned investors placing the occasional wrong bet. So how are investors supposed to avoid this pitfall? One simple strategy can come in handy: look for stocks with exceptional potential for growth. These stocks with huge upside potential can make especially compelling investments. We turned to the TipRanks stock screener to help us pinpoint 3 stocks that are poised to outperform the broader market over the next twelve months. We filtered the results to show stocks with “strong buy” consensus ratings, narrowing our search down to the stocks with over 30% upside potential from the current share price.
Let’s take a closer look at these 3 ‘Strong Buy’ stocks that analysts believe could soar:
While a complete 5G takeover won’t happen in 2019, Nokia is expecting the game-changing technology to fuel solid growth.
The company has already started preparing for when the 5G era is ushered in, making a significant investment in upgrading its infrastructure. Nokia already has 45 5G-related hardware contracts throughout the world. This is on top of the 1,500 5G-related patent families that NOK has filed patents on. Furthermore, the company has placed a substantial focus on expanding the enterprise segment of its business. It has acquired 32 new enterprise customers, adding to the 150 it gained in 2018.
While the telecommunications company faces stiff competition, one top analyst believes its superior product offering will give it the advantage.
“We believe only Huawei and Nokia have full end-to-end product portfolios with wireless, fixed networks, and IP routing solutions, positioning Nokia for leadership with the top carriers as networks transition to 5G. Further, with Huawei still potentially banned from certain markets, we view Nokia as the only global supplier with an end-to-end solution, as evidenced by leading global carriers choosing Nokia as a partner for 5G deployments,” said Canaccord's Michael Walkley, a five-star analyst according to TipRanks.
In the long-term, Walkley believes the company can emerge as an industry leader. “Further, we anticipate an increasing revenue mix from higher-margin regions as the U.S., Japan, and Korea represent some of the early adopters of 5G investments. We also anticipate higher-margin software and enterprise sales will grow faster than the company average and contribute to longer-term margin expansion,” he explained.
TipRanks’ data shows a small but bullish camp backing this telecoms equipment maker. The ‘Strong Buy’ stock has amassed 3 ‘buy’ ratings in the last three months. The 12-month average price target stands tall at $7.50, marking nearly 43% in return potential for the stock.
After its recent second-quarter earnings release showed a loss of 126,000 new subscribers, investors were left wondering whether Netflix's slip up was a temporary occurrence or a long-term trend. However, some analysts maintain that the streaming platform’s long-term growth narrative remains unchanged.
The drop in subscribers has been attributed to the weaker content lineup in the quarter. That being said, the company is already making up for it with the third season of its hit show, Stranger Things. In just four days after its release, over 40 million households had seen at least part of the season. The stronger content slate includes new seasons of fan favorites La Casa de Papel, The Crown and Orange Is the New Black as well as Robert De Niro’s film, The Irishman.
Five-star J.P. Morgan analyst, Doug Anmuth, argues that the impressive content lineup puts Netflix on the path towards long-term growth: “It may not be easy, but we believe its net adds target is achievable given the slate and shift of marketing spend into the second half of the year. Importantly, we do not believe Netflix is factoring in much for new mobile-only subs in India in 2H 2019 numbers.”
Netflix also stands to benefit from the continued shift away from linear TV. Worldwide internet penetration is only expected to increase, with the number of users reaching 5.5 billion by 2025 according to current estimates. The TV streaming penetration rate is expected to rise at a similar rate as internet households shift to more convenient and less expensive internet TV.
While the company does face competition from Disney’s (DIS) new streaming service, Anmuth doesn’t believe that it will have a major effect on Netflix's subscribers.
Wall Street is on the same page. This ‘Strong Buy’ received 26 Buy ratings vs 5 Holds and 1 Sell over the last three months. Not to mention its $412 average price target suggests 33% upside potential from current levels.
A series of injuries as well as the drop in ratings and attendance weighed heavily on WWE earlier this year. That being said, the wrestling media company has come a long way, showing investors that it’s making moves in the right direction.
In late July, WWE posted a Q2 earnings beat in addition to maintaining that it will reach its adjusted OIBDA target for full year 2019 of at least $200 million. Marci Ryvicker, a five-star analyst, notes that while management’s tone wasn’t overly exciting, it seemed to be more optimistic than it has been in a while.
The company has made progress in improving the brand with continued investments going towards increasing audience engagement and ultimate franchise value.
Not to mention several catalysts could work in WWE’s favor. On July 24, the company started transitioning to Network 2.0, with the upgraded network featuring an on-demand service. WWE can also stand to gain from sponsorship revenues as WWE is vastly under-monetized in relation to other sports.
While Ryvicker notes that WWE is trading above the Wolfe Diversified Entertainment Index, it continues to trade at a lower price than other niche sports even though it has demonstrated much faster OIBDA growth.
“We like the LT focus and commitment of this management team, even if communication may sometimes falter. We also got a bunch of data points that suggest engagement metrics will continue to improve,” Ryvicker added.
All in all, despite a a somewhat disappointing first quarter, WWE stock is ready to punch back! In the last three months, the stock has won 6 back-to-back 'buy' recommendations. With a return potential of close to 30%, the stock's consensus price target lands at $95.00.
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