Historically, the stock market has averaged a high single-digit return for investors. But in 2021, the benchmark S&P 500 doled out a 27% gain and set nearly six dozen all-time closing highs. Yet in spite of these big gains, select Wall Street analysts and investment banks still…
foresee significant upside in a number of growth stocks. Based on the high-water 12-month price targets from Wall Street, the following five growth stocks offer upside ranging from 119% to as much as 409% in 2022.
Nio: Implied upside of 159%
Think electric vehicle (EV) stocks have soared? According to one investment bank, which has a currency-converted price target of $86.75 on China-based Nio (NYSE:NIO), the good times are just getting started. If this price target were to come to fruition, Nio shares could rally close to 160% in 2022.
Although shares of the company looked very expensive at this time last year, management has done an excellent job of ramping up production, even with persistent supply chain issues plaguing the auto industry. In November and December, Nio delivered nearly 10,900 EVs and 10,500 EVs, respectively, putting it on track for an annual run rate of 130,000 EVs. Thanks to organic growth and the expected introduction of three new vehicles, the expectation is for the company to be producing at an annual run rate of 600,000 EVs by year’s end.
Nio’s battery-as-a-service (BaaS) program is also genius. Introduced in August 2020, the BaaS program allows buyers to charge, swap, and upgrade their batteries, as well as receive a discount on the initial purchase price of their EV. In return, buyers pay a monthly fee to Nio. The company is effectively forgoing a little short-term, low-margin revenue for higher-margin long-term cash flow and improved customer loyalty.
I never thought I’d say these words… but I’m excited about an EV stock.
Pinterest: Implied upside of 129%
Another highly popular growth stock with the potential to more than double in 2022 is social media platform Pinterest (NYSE:PINS). Wall Street’s loftiest price target foresees shares heading to $83 in 12 months, which would imply upside of almost 130%.
Last year, Pinterest’s shares took it on the chin after the second and third quarters showed sequential declines in the company’s monthly active user (MAU) count. Superficially, this might sound concerning, but it represents nothing more than a reversion to historic MAU growth with coronavirus vaccination rates ticking higher.
What’s far more important to recognize is that Pinterest is successfully monetizing its users. Despite slower MAU growth, the company’s average revenue per user (ARPU) globally surged 37% in the third quarter, with international ARPU up more than twice that amount (81%) from the prior-year period. The takeaway here is simple: Advertisers are willing to pay more to get their message in front of Pinterest’s 444 million potentially motivated shoppers.
As a Pinterest shareholder, I also appreciate how perfect the operating model is for advertisers. There’s no guesswork involved. The premise of the platform is for users to share what things, services, and places interest them. This makes it easy for Pinterest to connect users with merchants that can cater to their interests. There’s a good reason I picked this stock to double in 2022.
Block: Implied upside of 119%
Pandemic darling Block (NYSE:SQ), the company formerly known as Square, is another growth stock with significant upside, at least according to Wall Street’s price targets. With a Street-high prognostication of $360 from Sean Horgan at Rosenblatt Securities, Block could offer 119% upside this year.
For more than a decade, Block has relied on its seller ecosystem to do most of its heavy lifting. This is the operating segment that provides point-of-sale devices, loans, and analytics to help merchants grow their business. In 2012, gross payment volume (GPV) on Block’s network totaled $6.5 billion. But as of the third quarter, run rate GPV was $167 billion.
The really interesting aspect of the seller ecosystem is that it’s no longer just a haven for small businesses. Two-thirds of the company’s third-quarter GPV originated from businesses with at least…
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