If your stocks rose 30% in a year, would you consider that a good year?
For most people, the answer to that question would be a resounding “yes!”
Historically, stocks have tended to return 9-10% a year. Some years are better than others — 2021 was a huge outlier — but over the past century, the tendency for stocks to have low double-digit returns has been pretty consistent.
So, if your stocks are going up 30% year in and year out, you’re beating the market by a wide margin. In fact, you’re even beating Warren Buffett: his compound annual return over 50 years has been 20%!
So, a 30% annual return is a very good one. The problem is finding stocks that will deliver such a return. Statistically, you’re very unlikely to find them. But there’s no shortage of stocks out there that Wall Street thinks will return 30% or better. Analyst “price targets” reflect where Wall Street’s research teams think stocks should go in the future. They’re no guarantee of future performance. But they’re one place to start your research. With that in mind, here are three stocks that Wall Street thinks could rise 30% — or more!
Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) is a stock that’s currently trading for $51 on the TSX. Analysts think the U.S. (NYSE) version of this stock is worth US$91.95. That’s an upside of 127% to the current price. It’s also not an unrealistic price for this stock to go to. Lightspeed is has been well over US$91.95 before. At its very highest, it was trading for about US$124. It was a great time for Lightspeed investors. However, two negative catalysts materialized to take the stock lower:
- Spruce Point Capital released a scathing report on the stock, almost accusing it of accounting fraud.
- The company’s most recent earnings release disappointed, with a wider-than-expected net loss.
These two factors combined to deliver a brutal couple of months for LSPD. But the company’s revenue growth is still very strong, so there is potential for more gains going forward, as long as management can get those losses under control.
Docebo (TSX:DCBO)(NASDAQ:DCBO) is a Canadian e-learning company whose stock delivered big gains during the COVID-19 pandemic. In 2020, its stock rose 366%. In 2021, it followed that performance up with a more modest 8% gain. Basically, Docebo was a “COVID-19 winner” stock. The company was developing online learning software right at the same time as the economy was shifting to a work-from-home model. With people working from home, companies needed a fully online way to train their employees. Docebo was right there offering it to them.
Naturally, the company scored plenty of big corporate clients in short order. Its stock predictably soared. Today, with the pandemic waning, Docebo is giving up some of its gains. But analysts are still bullish, with price targets that imply 36% upside to today’s price.
Nuvei (TSX:NVEI)(NASDAQ:NVEI) is another Canadian tech stock that Spruce Point Capital is shorting, but analysts think has significant upside. As of this writing, the consensus price target on the stock was $169. That’s 106% upside to where the stock is now. Nuvei is a very fast-growing company. For the trailing 12-month period, its growth in revenue was 84%, and its growth in EBIT was 104%.
Despite all that growth, the stock is fairly modestly valued, with a 0.61 PEG ratio based on forward earnings. The “forward P/E ratio” is an estimate, of course, but it’s based on official company forecasts. So, if Nuvei’s growth continues, then it will eventually appear to have been cheap at today’s prices.