After one of the worst years for stocks in recent memory, many analysts are hopeful that 2023 could accompany some relief gains. Indeed, the harder-hit names of 2022 could have the most room to run once the bear market enters old age, potentially setting the stage for the next bull market. In this piece, let’s check out two stocks that the analyst community expects more than 35% in gains from over the year ahead. Recession or not, it’s hard not to be tempted by the following names that analysts still praise.
Amazon (NASDAQ:AMZN)
The e-commerce behemoth and disruptor has fallen in a huge way. The stock lost around 55% of its value from peak to trough. It’s been a painful fall, but the long-term growth picture still looks attractive, even if the coming quarters are expected to be a doozy.
Even after a more than 50% haircut, AMZN stock sports a lofty 78.8 times trailing earnings multiple. With an expected recession to take a jolt out of consumer spending, the stage looks set for a rough patch in the first half of 2023. Still, at 1.7 times sales, the innovative disruptor is cheap relative to the long-term growth you’ll get.
Of all the FAANG names, Amazon arguably has the most attractive growth story. It’s ready to disrupt new markets, even as the winds of recession add a chill to financial markets.
Last year, Amazon’s “Buy With Prime” button failed to garner hype from investors who soured on the former FAANG top dog. I think the new service aimed at third-party retailers could help Amazon make noise in payments, fulfillment, and further pressure e-commerce firms that have found success with helping smaller businesses start up their own online shops.
There’s a lot of growth to be had with the little guy in retail. As Amazon continues to invest in its value-adding platform, the tides could turn in a major way once the looming spending drought shows signs of exhaustion.
What is the Price Target for AMZN Stock?
Wall Street is sticking with its long view of Amazon. The average AMZN stock price of $139.74 implies a whopping 62.7% gain from here.
PayPal Holdings (NASDAQ:PYPL)
PayPal is a top dog in digital payments, but questions linger as to how it’ll continue to attract and retain users as new offerings in the fintech arena become available. During the glory days (2021) of fintech, mid-cap up-and-comers were seen as the next big thing. PayPal stock showed signs of weakness in mid-2021, when the stock peaked.
With rates on the rise and fintech unicorns fading into the background, the focus has shifted back to mature and profitable companies. In that regard, PayPal still looks like a capable firm ready to grow its presence in the massive online payments space.
As tech titans like Amazon begin to set their sights on online payments, PayPal will need to also find a way to pivot.
In a prior piece, I argued that an acquisition of a social-media firm made the most sense, given social commerce is a forward-looking trend to could be incredibly profitable. Indeed, such a pivot seems drastic, even far-fetched, for a payments company. However, pivoting may ultimately be necessary if the firm is to fight back at some scary rivals that are hungry to steal market share in payments.
Despite headwinds, PayPal stock looks like a great value play in the tech scene at 37.9 times trailing earnings – very reasonable for an innovator with a stellar ecosystem.
Recently, Truist upgraded the stock to a Buy, with a $95 price target.
What is the Price Target for PYPL Stock?
Wall Street loves PayPal. The average PYPL stock price target of $107.15 implies a solid 37.9% gain to be had over the year ahead.
The Takeaway
Wall Street analysts have grown more selective over the last several months. After numerous price target (and rating) downgrades, the “Strong Buys” still standing are worthy of attention. Of the two names mentioned in this piece, analysts expect more gains (~63%) from AMZN stock.
