5 Stocks to Buy for 50% Upside in the Second Half of 2022

  • Growth stocks to buy for second half of 2022 for potential returns of 50%
  • Nio (NIO): China’s policies for EVs is likely to be a tailwind. New models and international expansion will boost growth.
  • PVH (PVH): Strong quarterly numbers and a healthy guidance for 2022 even with macro-economic headwinds. Stock seems undervalued.
  • Coupang (CPNG): Visibility towards profitability is a big positive. Expansion within Korea and inroads in international markets will boost growth.
  • Palantir (PLTR): Looks oversold considering the growth potential. Healthy addition in customers and a decent order backlog.
  • Marathon (MARA): A high-risk bet that can deliver multi-fold returns if cryptocurrencies trend higher.
stocks to buy - 5 Stocks to Buy for 50% Upside in the Second Half of 2022

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Growth stocks have suffered immensely in the first five-months of 2022. The S&P 500 Pure Growth Index has declined by 22% during this period. However, there are dozens of growth stocks that have corrected by more than 50%. While global economic uncertainties prevail, there are stocks to buy for the second half of 2022 for robust returns.

My focus is on oversold growth stocks to buy that can potentially witness a sharp reversal rally. It’s worth noting that be it a euphoric or a correction, the reactions are on the extreme. On the downside, this presents a good buying opportunity.

A good example is Chinese electric vehicle company, Li Auto (NASDAQ:LI). LI stock has surged by 40% in the last one-month. Irrespective of broad market conditions, there will be such opportunities.

Let’s talk about five stocks to buy that can potentially deliver 50% returns in the next six-months. I believe that these stocks are also worth holding for the long-term.

NIO Nio $18.89
PVH PVH Corp. $67.96
CPNG Coupang $12.31
PLTR Palantir Technologies $8.72
MARA Marathon Digital $7.66

Nio (NIO)

NIO store sign and customer in electric car store. NIO is a Chinese EV company
Source: Robert Way / Shutterstock.com

In the last one-month, Nio (NYSE:NIO) stock has surged by 30%. However, the rally from oversold levels is likely to sustain in the second half of 2022.

Recently, policymakers in China announced that purchase tax on low-emission passenger vehicles will be reduced. China is also in talks with automakers for EV subsidy extension. This is another potential catalyst for Nio stock upside.

Given these policy factors, it’s likely that vehicle deliveries will remain strong. It’s also worth noting that Nio has three new vehicles launches in 2022. This will ensure that deliveries growth remains strong through 2023. The company’s expansion in European markets is another catalyst for deliveries growth.

From a financial perspective, Nio reported cash and equivalents of $8.7 billion as of December 2021. There is ample cash buffer for aggressive expansion. With deliveries growth, the company’s vehicle margin has also been improving on a sustained basis.

PVH Corp. (PVH)

A photo of a Tommy Hilfiger retail store. Coach is one of the brands owned by PVH.
Source: Martin Good / Shutterstock.com

PVH (NYSE:PVH) has been an under-performer in the last 12-months with a correction of 35%. However, at a forward price-to-earnings-ratio of 7, the stock seems attractively valued.

Recently, UBS opined that PVH stock has an upside potential of 83%. A key reason for this bullish view is “major margin unlocks that will play out over the next few years.” With investors looking for value stocks with a strong balance sheet, PVH stock is likely to be in the limelight.

It’s also worth noting that the company recently reported results for Q1 2022. The company’s earnings per share exceeded the guidance. Furthermore, PVH has a robust outlook through 2022. Even with macro-economic headwinds, a healthy guidance for the year is likely to take the stock higher.

With a strong balance sheet, PVH is also positioned to create value through share repurchase and dividends. For the year, the company has raised the repurchase target to $400 million from an earlier guidance of $225 million. While the current dividend yield is just 0.21%, there is dividend growth visibility.

Coupang (CPNG)

The Coupang (CPNG stock) campus in Silicon Valley, California.
Source: Michael Vi / Shutterstock.com

Among e-commerce stocks, I believe that Coupang (NYSE:CPNG) is attractively priced. One reason for a deep correction in CPNG stock was uncertainty related to growth and profitability.

However, there seems to be more clarity on that front. First and foremost, the company’s adjusted EBITDA loss narrowed in Q1 2022. Further, Coupang has guided for long-term adjusted EBITDA margin target of 7% to 10%. The company also expects product commerce adjusted EBITDA to be profitable by Q4 2022.

From a growth perspective, Coupang has 18 million active customers in Korea. The total online shoppers in Korea are approximately 37 million. Therefore, there is scope for customer acquisition driven growth. Coupang is also looking at expansion beyond Korea. With Southeast Asia in focus, there is potential for a wider addressable market.

As of March 2022, Coupang reported cash and equivalents of $3.3 billion. The cash buffer provides resources for international expansion and investment in new growth initiatives (Coupang Eats). Overall, CPNG stock is among the top stocks to buy for strong upside in the second half of 2022.

Palantir Technologies (PLTR)

Palantir (PLTR) logo on data network background, imaginary location in the future
Source: Spyro the Dragon / Shutterstock.com

Palantir Technologies (NYSE:PLTR) has slumped by 55% in the last six-months. I believe that the stock is worth accumulating below $10.

In terms of positives, Palantir reported a healthy revenue growth of 31% for Q1 2022 to $446 million. The company also reported adjusted free cash flow of $30 million for the quarter.

It’s also worth noting that the company has guided for top-line growth in excess of 30% through 2025. After a meaningful correction, the PLTR stock seems poised for a rally.

Palantir has also seen a healthy growth in customer count. For Q1 2022, the company added 37 net new commercial customers. With the company ending Q1 2022 with a net dollar retention of 124%, the long-term cash flow outlook seems robust.

Even from a balance sheet perspective, Palantir looks attractive. The company ended Q1 2022 with $2.3 billion in cash and zero debt. There is ample flexibility to invest in innovation driven growth.

Marathon Digital (MARA)

Marathon Oil (MRO) gas station carport on sunny day with blue sky background
Source: Jonathan Weiss/shutterstock.com

I would add Marathon Digital (NASDAQ:MARA) among the stocks to buy for the next six-month. Without doubt, it’s a high-risk bet. However, at levels below $10, the stock seems very attractive.

It goes without saying that the plunge in MARA stock has been in-sync with the decline in Bitcoin (BTC-USD). It however seems that the cryptocurrency is in a consolidation zone.

Marathon Digital reported hashing capacity of 3.9EH/s for April 2022. The company expects to ramp-up capacity to 13.3EH/s by mid-2022. Further, the target is to boost capacity to 23.3EH/s by early 2023.

The targets seem steep. However, given the gradual addition of miners, the company is positioned for sustained growth in the next 12-24 months. Digital assets will also continue to swell in the company’s balance sheet.

Once Bitcoin trends higher, the upside in MARA stock can be significant. I would therefore consider some exposure to this high-risk bet for the next few quarters.

On the date of publication, Faisal Humayun 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.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.


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