You may not realize it, but the broad-based S&P 500 enjoyed a historic bounce from the March 2020 pandemic low. It took less than 17 months for the index to double from its trough, which is pretty incredible when you consider that the average annual total return, including…
dividends, for the S&P 500 is closer to 11% since the beginning of 1980.
Despite these big gains, select analysts and investment banks see a lot more upside for a small group of hypergrowth companies (those delivering jaw-dropping sales growth). If Wall Street’s loftiest price targets for the following three fast-paced stocks prove accurate, they could soar 216% to 257% in 2022.
Coinbase Global: Implied upside of 216%
The first hypergrowth stock with immense upside this year is cryptocurrency exchange and ecosystem Coinbase Global (NASDAQ:COIN). Analyst Lisa Ellis of MoffettNathanson holds the high-water price target for Coinbase on Wall Street at $600. Should it reach this lofty figure, shareholders would realize a 216% return on their investment, based on where shares ended on Monday, Jan. 31.
If investors take a close look at Coinbase’s operating performance, they’re going to like what they see. As of the end of the third quarter, the number of monthly transacting users had more than tripled from the prior-year period to 7.4 million, with assets on the platform surging to $255 billion from $36 billion, year-over-year. Likewise, the company probably delivered more than $3 billion in net income in 2021.
A number of Wall Street analysts are clearly excited about the long-term prospects of the “Big Two” in crypto, Bitcoin and Ethereum, which account for a significant portion of Coinbase’s exchange-based trading revenue. They’re also intrigued about the company’s ventures beyond crypto exchanges, such as setting up a non-fungible token (NFT) marketplace for users. NFTs are the proof of ownership of digital assets stored on blockchain.
Although cryptocurrencies have handily outperformed the stock market on an aggregate basis over the past couple of years, there’s also a lot of risk that comes with such a lofty price target. For example, competition among crypto exchanges is heating up, not slowing down. Among traditional stock brokerages, commission wars eventually led to the elimination of these fees. It seemingly wouldn’t be difficult for other crypto exchanges to undercut Coinbase’s fees.
Another concern is that the company is almost entirely reliant on external factors instead of innovation to grow. With much of its growth reliant on the performance of Bitcoin and Ethereum, price weakness from the Big Two, or even a loss of interest from the investing community, could threaten to send revenue and profits markedly lower. It happened in 2018, and history suggests it could happen again.
In other words, I wouldn’t expect Coinbase to get anywhere near $600 in 2022.
Plug Power: Implied upside of 257%
Another hypergrowth stock with the potential to skyrocket this year, at least according to one Wall Street analyst, is hydrogen fuel-cell solutions provider Plug Power (NASDAQ:PLUG). Amit Dayal of H.C. Wainwright has Plug hitting a price target of $78, which implies up to 257% upside from where shares closed out January.
You could certainly say that Plug Power finds itself in the right place, at the right time. Most countries are looking for ways to reduce carbon emissions and promote green-energy solutions. This means Plug’s hydrogen fuel-cell solutions for vehicles and individual machines (like forklifts), as well as its hydrogen infrastructure hubs, should be in high demand for many years to come.
What’s really validated the potential for this company is the handful of major partnerships and joint ventures that have been struck since the beginning of 2021. For instance…
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