2023 has been a stock-pickers market. Yet that hasn’t stopped — nor should it stop — investors from looking for long-term stocks with 100% upside. Put simply, they want stocks with high upside potential and are looking at committing for the long term.
While this year has been about stock-picking, it’s more than just trading the short-term trends like artificial intelligence. Instead, it’s an investing environment where a handful of stocks are generating a bulk of the stock market’s gain and a majority of stocks struggle for traction, or investing in long-term stocks.
Think about it. Through the first several months of this year, just seven stocks were responsible for almost 90% of the gains in the S&P 500. Other industries and sectors have had a few weeks for good price action here and there, but have generally lacked commitment to the upside.
The bad news is obvious: Buying these stocks hasn’t yielded very good results.
However, the good news is that these long-term stocks with 100% upside (or more) are not crowded trades, nor have they rallied all that much. Let’s look at a few now.
The Trade Desk (TTD)
Sometimes you find stocks that you just don’t want to give up on. For many growth investors, one such name is The Trade Desk (NASDAQ:TTD), one of the top long-term stocks.
Simply put, co-founder and CEO Jeff Green has built an excellent firm with a wonderful business. Many critics used to make the case that The Trade Desk was expensive based on its price-to-sales valuation — a common valuation metric for growth stocks. However, this was the wrong metric to use for The Trade Desk, because this firm was already profitable! They should have been valuing The Trade Desk on its profits, not its sales.
While the stock did command a premium, it deserved to because of its strong business and robust growth. Even now, the company continues to churn out impressive growth results. Just last quarter, it delivered a top- and bottom-line beat as sales grew 21.4% year over year.
Further, the bottom of management’s revenue outlook for next quarter topped consensus expectations. All these factors make Trade Desk one of those long-term stocks with 100% upside potential.
Disney (NYSE:DIS) is operating in a tough environment, particularly for investors who believe that a recession is on the way. Should one materialize, Disney is going to struggle. So far though, recession worries only persist in the face of a strong labor market.
That hasn’t stopped Disney stock from getting crushed. Shares are down 57% from the high and are just a stone’s throw from the 52-week low. A 4% decline from current levels will land Disney at new lows, while a 9.9% fall will put it back at the 2020 low. I found that hard to believe.
While Disney is making some turnaround adjustments, those will take time. The recent earnings report was mixed and investors simply aren’t biting at the opportunity to get long. That said, this is Disney, the king of entertainment.
If shares were to bottom right now and rally back to the highs, it would be a gain of 131%. I think at some point, Disney will hit a new high, thus making it a 100% upside potential stock.
There has been absolutely no love for PayPal (NASDAQ:PYPL) stock lately. Despite a series of impressive earnings reports, the last report on May 8 was a disappointment. Or at least, the market was disappointed.
That’s even as the company delivered a top- and bottom-line beat. Management talked about narrowing margins in the second half of the year, but issued strong Q2 earnings guidance and even gave a slight boost to management’s full-year outlook.
It’s an interesting case of valuation. Just like a high valuation has not limited the rally in Nvidia (NASDAQ:NVDA), a low valuation is not drawing in the buyers for PayPal. Management expects the company to earn almost $5 a share this year (up about 20% vs. 2022), leaving the stock to trade at roughly 12 times earnings.
Analysts expect about 15% earnings growth next year, as well. If the company can continue to grow like this, it’s only a matter of time before it finds itself back in the good graces of the market.
On the date of publication, Bret Kenwell held a long position in TTD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.