When a stock looks beaten down enough, the imbalance of supply and demand oftentimes positions it just on the verge of a breakout. Many investors have a wealth-generating trading strategy by targeting these companies that seem overlooked by everyone around them. So when the market sentiment for certain stocks is at its lowest, historically it has been an interesting time to begin buying once in a lifetime stocks.
After all, with a stock discounted so far below its fair value, its risks become negated and the potential outcome skews to the upside. Of course, this doesn’t apply to every beaten-down stock. Beneath the surface, you still want to identify the companies that truly have a solid business model with growth potential. As such, this article will spotlight three companies that have the potential to bounce back with some seriously strong performances later this year.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is always making headlines in the financial world, whether positive or negative. So far in 2024, sentiment has unfortunately been negative, with the stock falling by nearly 30%. However, analysts on Wall Street are already banking on a comeback. The average price target sits at $182.51 and the high-end target is $320.00 which implies about an 80% upside.
A lot of the future of Tesla’s stock hinges on the much-discussed compensation package for CEO Elon Musk. If shareholders vote against it, Musk said he will take his AI technology to another company or even start a new one. For many analysts on the sidelines, without Musk and AI, Tesla’s stock will plummet. But if Musk can stay on, Tesla’s stock can see a massive upswing as it plays the catching-up game with countless other AI names.
When looking at its valuation, we see that TSLA trades at 71x forward earnings and 6.5x sales. While this stock remains classified as a slightly pricey tech stock (as opposed to an automaker) its ten-year revenue CAGR of 47% makes its valuation easily justified. With a large discount currently at its all-time high, we suggest all investors look at the outcome for Tesla following the shareholder vote.
PayPal (PYPL)
While PayPal (NASDAQ:PYPL) was once the darling of the fintech sector, its performance following the pandemic has not been friendly. Nonetheless, despite being down to nearly $67 after peaking at around $300 in 2021, Wall Street analysts have initiated a street-high target of up to $120. This implies that analysts see the potential for PayPal to trade as much as 80% higher than its current price.
So, why hasn’t PayPal’s stock recovered already? After all, the company has more than 427 million active accounts that processed over 6.5 billion transactions in just its first quarter alone. While this shortage in overall stock growth seems to be a harsh reversal after the drop in digital transactions post-COVID, Paypal is now eyeing the crypto world for a new growth avenue. In fact, PayPal’s PYUSD stable coin very recently joined the Solana blockchain and could be a large growth driver for the next several years.
Looking at its valuation, we see that its stock price drop of more than 40% over the past 5 years has put it at nearly 61% discount to its 5-year P/E average. Surprisingly, even during this downturn, PayPal has managed to grow revenue at a CAGR of 14%. For investors who missed PayPal’s COVID boom, consider scooping up a few discounted shares for its potential once-in-a-lifetime surge heading into the growing crypto landscape.
Boeing (BA)
Boeing (NYSE:BA) is one of the two main global airplane manufacturers in the airplane supply business. Despite the troubles for Boeing this year, analysts still have an average price target of $220.27 and a street-high target of $275.00. If that high-end target hits, Boeing could have a surge of more than 50% this year.
There is not much to say about Boeing’s issues this year as they are obvious by now. Multiple planes have had issues either upon landing or in mid-air with unfortunate repercussions. The problems are so bad that CEO Dave Calhoun has even announced his departure from the corner office. While this has shaken up the company recently, a new executive team could be the breath of fresh air this company sorely needs for future growth.
Shares of Boeing currently trade at 29x forward earnings and 1.5x sales. While recent sales numbers haven’t been great for Boeing, its optimistic forward earnings could stabilize along with the company. If the right candidate is brought in to be the new CEO, they will have their work cut out for them. The good thing is, that as long as Boeing maintains its duopoly over the commercial plane market, a rebound is almost inevitable, making it one of the best once in a lifetime stocks.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.