Regardless of whether you’re a Wall Street veteran or new to investing, the past four years have been a roller coaster ride. A global pandemic brought a 14-year-long bull market to a screeching halt. It quickly revived into another stock boom that saw the S&P 500 hit a new all-time high, only to reverse course again amid rising interest rates, soaring energy costs and rampant inflation.
This year was shaping up once more to be another clinic on how stocks can flex their muscles, but the popular benchmark index just slipped into correction territory as it recently closed down 10% from its summer high.
Such dramatic reversals cause concern among even the most battle-tested investors. History, though, shows every downturn is followed by an upswing. When markets fall, that’s when you want to put your money to work. It’s why analysts tend to have bullish outlooks on the stocks they cover.
According to the 12-month price targets of select Wall Street analysts, these three stocks to buy for the next bull market are poised to soar between 65% and 132%!
Danaher (DHR)
Medical tool and equipment manufacturer Danaher (NYSE:DHR) hasn’t fared any better lately than peers like Thermo Fisher Scientific (NYSE:TMO) or Repligen (NASDAQ:RGEN). The sector went through something of a boom-bust period during the pandemic and its aftermath. Now the industry is suffering from destocking after the COVID-19 buildup. However, once it works through that inventory, it will feel the tailwind at its back once more.
It won’t be a quick, painless transition. Depending on how long the destocking phase takes, it is going to pressure Danaher’s sales and profits. Also, the company generates some 12% of its revenue from China, which could further impede revenue and profit growth as geopolitical tensions grow.
Danaher, though, is prepared for the turnaround. The company made itself leaner by spinning off its water and product quality outfit Veralto (NYSE:VLTO). Danaher became a more focused, pure-play healthcare stock as a result. It previously spun off Fortive (NYSE:FTV) and Envista Holdings (NYSE:NVST).
Wall Street set a $320 per share high price target on Danaher, which is 67% above where the stock currently sits. A return to more normalized growth patterns beginning in 2024 should make attaining that higher price point possible. Yet it does sport higher valuations than many of its peers, indicating it could have further to fall before it kicks into high gear once again.
QuantumScape (QS)
Electric car battery startup QuantumScape (NYSE:QS) is a risky play on EVs because it has yet to bring a product to market at a commercial scale. Yet its solid-state design holds the promise of revolutionizing the EV market as it allows for faster charge times, greater efficiency and improved safety.
According to QuantumScape, tests show its batteries can charge from a low-charge state to 80% in just 15 minutes. They can also retain 80% of their charge after 800 cycles, which could power a battery electric vehicle (BEV) for 240,000 miles. The company is testing its prototypes with major clients, including financial backer Volkswagen (OTCMKTS:VWAGY).
Don’t underestimate the importance of QuantumScape’s achievement. Not only will EVs use its technology, but other products as well. It opens up new potential markets for it. That’s when the stock would really hit the accelerator.
As it is, analysts already see QuantumScape’s stock preparing for liftoff. Having assigned a $10 per share one-year target on the high end, Wall Street anticipates 92% price appreciation over the next year. Of course, be cautious. This is a development stage business. It has no revenue to speak of, no profits and is supported only by the strength of its research — with some financial backing. It looks very promising at the moment, but even in a bull market investors should not pour their life savings into it.
Albemarle (ALB)
Lithium miner Albemarle (NYSE:ALB) is tanking as consumers balk at paying Big Auto’s premium for EVs. Ford (NYSE:F) and General Motors (NYSE:GM) warned sales are much weaker than expected. GM is also slowing the development of new EVs. It also canceled plans with Honda (NYSE:HMC) to jointly develop lower-cost models.
EVs have always been a top-down marketing effort. And while consumers do want alternatives, fossil fuel-powered cars are still the preference. GM is waking up to the fact that its plan to sell only zero-emission vehicles by 2035 was never realistic. The toll on the environment also means EVs were never as green as touted.
Yet there remains a strong tailwind behind Albemarle. A global lithium shortage is expected as soon as 2025, even with recent new deposit discoveries. That should push prices higher, even if they’re weakening now. In the meantime, Albemarle is still very healthy and profitable. Revenue was up 60% last quarter and adjusted EBITDA grew 69%. “That helped it raise the lower end of its full-year sales guidance and the range of its adjusted EBITDA forecast.”
Consensus estimates on Wall Street put a one-year price target average of $255.80 per share on Albemarle’s stock. That’s 102% above where it currently trades. At 5 times forward earnings estimates and 15x free cash flow, the lithium miner looks like a stock to buy for the bull market that is to come.
On the date of publication, Rich Duprey 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.
