Wall Street analysts have set price targets for where they think a stock could move over the next year. A high price target can be a good indicator of a growth stock with a lot of potential. But investors should be careful not to assume that a stock is a safe bet just because it has significant upside potential. In some cases, a stock may appear to have significant upside potential only because it has fallen sharply recently.
Three stocks that have bullish consensus price targets implying an upside of 30% or better are MicroStrategy (NASDAQ:MSTR), Rivian Automobile (NASDAQ:RIVN)And Discovery of Warner Bros. (NASDAQ:WBD). Let’s take a closer look at these stocks to see if they are indeed good buys or if downgrades could occur.
MicroStrategy: 30% increase
MicroStrategy is a fascinating company because its operations are focused on analytics and helping businesses make business intelligence decisions. For the most part, this activity has not experienced rapid growth. In the first three months of this year, revenue totaled $115.2 million, down 5% from the year-ago period. It also suffered a hefty operating loss of $203.7 million.
The reason for this result was a loss in value of digital assets totaling $191.6 million. The company is incredibly bullish on Bitcoin, and in the first line of the company’s earnings release, MicroStrategy highlighted that it was “the largest company holding Bitcoin.” He even reported that at the end of the quarter he had 214,400 bitcoins.
MicroStrategy is a volatile stock that also appears to be trying to leverage the enthusiasm around Bitcoin for its business – and it has worked as the stock has more than doubled since January. However, its fundamentals do not seem excellent. The company is struggling to ensure its profitability and is very exposed to Bitcoin.
This stock appears to be overdue for some downgrades, and investors should take note of that.
Rivian Automotive: increase of 91%
Electric vehicle maker Rivian Automotive is poised to rise more than 90% if Wall Street analysts are to be believed, as they have a consensus price target of nearly $20.
Rivian struggles with its rival You’re here This year, growing competition from China and concerns about demand in a difficult economic environment have investors worried about the future of these products. Electric vehicle manufacturers. Rivian is a much riskier stock than Tesla because it is less established and is not profitable.
Its shares have fallen more than 56% this year (Tesla is down 26%). This decline is likely one of the main reasons why Rivian shares appear to possess a lot of upside potential right now. At the start of the year, the stock was trading at over $20; analysts probably did not expect such a strong and rapid sell-off.
It will be a rocky road ahead for Rivian stock, however. The company is far from profitable and normally suffers quarterly losses well in excess of $1 billion. And with Rivian cutting prices on its vehicles, the stock’s outlook isn’t looking any better at the moment.
This is a risky stock to hold. Investors should not assume that this will increase, as further downgrades could be imminent for Rivian.
Warner Bros. Discovery: increase of 73%
Media company Warner Bros. Discovery is also struggling, with its shares falling 30% this year. Like the other stocks on this list, Warner Bros. hasn’t been in great shape, normally suffering losses.
The company is working to increase its subscriber base for HBO Max and Discovery+, but its goals appear disappointing. By 2025, it hopes to have 130 million subscribers, less than half of the approximately 270 million subscribers that Netflix currently has. One potential catalyst on the horizon this year is the planned launch of a sports streaming service that will involve Warner Bros. Discovery, Foxand ESPN (which Walt Disney possesses).
Last year, the company generated good growth with revenue of $41.3 billion, up 22% year-over-year. And its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 32% to $10.2 billion.
Warner Bros. Discovery is a bit of a risky stock, but it’s the best buy on this list. With some excellent brands in its portfolio, there’s a lot to like about its future prospects. While I don’t think it will rise as much as 70% over the next year, investors willing to take a chance on the stock could see good returns.
Should you invest $1,000 in MicroStrategy right now?
Before buying shares in MicroStrategy, consider this:
THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and MicroStrategy was not one of them. The 10 stocks selected could produce monster returns in the years to come.
Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $550,688!*
Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns as of May 6, 2024
David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bitcoin, Tesla, Walt Disney and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
3 stocks that can rise at least 30%, according to Wall Street. Are the analysts right? was originally published by The Motley Fool
