Many have touted artificial intelligence () in Wall Street for its stock-picking abilities, and I can confirm that AI is great for that. One AI model that stands out here is Google’s Bard AI, and its picks were surprisingly in line with Wall Street estimates too. However, I can also confirm that not all AI-recommended stocks are great. AI should only be used as a tool for stock picking and to analyze and understand the business models of different companies.
That said, asking it to recommend some stocks for triple-digit returns is not a bad idea. You can ask Bard to generate multiple drafts and, by doing your own screening and research on these drafts, it is possible to handpick many under-the-radar stocks with tremendous potential.
Finally, I will be excluding the picks Bard recommended in a similar article I wrote last week.
Me: Hi Bard, I am looking for some stocks to buy for triple-digit returns. Can you give me some ideas?
Let’s look at three:
Bard: “Okta (NASDAQ:OKTA) is a cloud-based identity management company that provides secure access to applications and services. The company’s platform is used by businesses of all sizes to manage user identities, authenticate users and enforce access policies. Okta is well-positioned to benefit from the growing trend of digital transformation, as more and more businesses move to the cloud. The company is also well-positioned to benefit from the growing demand for security solutions, as businesses become more aware of the need to protect their data.”
The cloud sector was on a roll earlier this year, and Okta had some momentum going up until May when its price hit nearly $91. However, Okta is down nearly 24% this month. That presents a good opportunity to snap up the stock in the long run. I agree with Bard’s opinion that the trend of digital transformation will carry it higher.
Sales are expected to pick up pace soon. We are looking at 17.5% growth in the company’s FY2024, which can accelerate to 21.2% in FY2026. Investors may also scoff at Okta’s lack of profits now, but losses have been steadily trimmed from $277 million in the July 2021 quarter to $119 million in the company’s latest reported quarter. In fact, analysts anticipate EPS to more than double in the next two years.
That said, patience is needed for triple-digit gains. The average analyst puts the one-year price target at $94, implying a 36% upside.
Bard: “PayPal (NASDAQ:PYPL) is a payments company that allows users to send and receive money online. The company’s platform is used by businesses and individuals to make payments for goods and services. PayPal is well-positioned to benefit from the growing trend of e-commerce, as more and more people shop online. The company is also well-positioned to benefit from the growing demand for mobile payments, as more and more people use their smartphones to make payments.”
PayPal is another company that is languishing at historically low prices. It is down almost 20% from its price five years ago. The growth isn’t far from 2018, and its top and bottom lines have expanded massively. However, the main problem here is customer acquisition. PayPal’s active accounts growth has slowed to a stall at 0.9% year-over-year, primarily due to a slowdown in e-commerce, online transactions and higher competition.
However, this has already been priced in, and I expect higher user growth. E-commerce and related segments have been undergoing a substantial cool-off to compensate for their unnaturally high growth during the pandemic era. Once they return to their original growth trajectories, we will see growth in PayPal’s user base too.
Nonetheless, this slowdown in new customers has not impacted PayPal’s financials too much. Revenue still grew by 8.6%. As per Wall Street analysts, the average one-year upside potential is similar to Okta. If you have patience, that can certainly reach triple digits in the coming years. Gurufocus puts a hefty $240 fair price tag by 2026.
Bard: “Upwork (NASDAQ:UPWK) is a freelance marketplace that connects businesses with freelancers. The company’s platform allows businesses to find freelancers with the skills they need, and it allows freelancers to find work. Upwork is well-positioned to benefit from the growing trend of remote work, as more and more businesses allow their employees to work remotely. The company is also well-positioned to benefit from the growing demand for skilled freelancers, as businesses increasingly outsource work to freelancers.”
Upwork has seen its share price bounce back in the past month, but it is down 60% from last year’s price. This selloff is showing signs of bottoming out and I think this is a great time to snap up some UPWK stock at the trough.
Upwork has a large and expanding addressable market as the gig economy grows, estimated at $1.3 trillion by the company. Despite slowing down, Upwork’s revenue growth has been impressive in the first quarter, with a 14% YOY increase. This growth is expected to reach 18.6% in 2025. At its current range, the market is certainly not pricing in the long-term sales expansion. It has declined to a level where any further slide downward seems unlikely. Expectations are low and even a bad quarterly report won’t drag it down much.
Thus, Upwork is a great stock to buy for triple-digit returns in the long run. The average analyst puts the one-year price target at $17, implying a 34.4% upside. Considering the massive potential of gig work, it is a bargain entry point.
On the date of publication, Omor Ibne Ehsan did not have (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.