Artificial intelligence (AI) may have been the name of the game for the past year or so, but it’s not the only game in town. Wall Street has been watching other sectors for growth opportunities, particularly as valuations have gotten into the nose-bleed section.
As much of a rocketship as Nvidia (NASDAQ:NVDA) stock was, it was not cheap by any stretch. Even with shares in official correction territory and down 20% from their all-time high, the AI stock still goes for 65 times earnings, 32 times sales and 72 times the free cash flow it produces. That’s hardly a bargain-basement valuation.
Because there are more fish to fry with potential big gains to be made, JPMorgan Chase (NYSE:JPM) analysts cast a wide net when looking for stocks to recommend. While investors always need to be careful when looking at analyst recommendations because their firms may have a financial interest in boosting a stock, here are three stocks the white shoe firm says can grow 53% or more over the next year.
Archer Aviation (ACHR)
The electric vertical takeoff and landing (eVTOL) industry hasn’t even taxied onto the runway yet. Still, JPMorgan analyst Reginald Smith says Archer Aviation (NYSE:ACHR) will be one of the companies that will help it take flight. The Wall Street Pro has a buy rating on the stock and set an $8 per share one-year price target. That implies a 118% upside over the next year and is worth looking at more closely.
Like fellow eVTOL stock Joby Aviation (NYSE:JOBY), Archer is wending its way through the regulatory labyrinth the Federal Aviation Administration devised before it can get airborne. Archer says it is on track to launch its commercial robotaxi service after gaining flight certification next year.
The eVTOL has important industry backing from automakers, airlines, NASA, and the U.S. Air Force. Archer says it has an order book for 700 aircraft once it receives FAA approval, the United Arab Emirates will let it launch its service once the FAA gives it the green light and Stellantis (NYSE:STLA) is financing the construction of a state-of-the-art manufacturing facility.
Creating something out of nothing could be risky, but Archer Aviation stock could pay off handsomely for early investors.
Baidu (BIDU)
Considering the rising trade and geopolitical tension between the U.S. and China, picking Chinese search engine Baidu (NASDAQ:BIDU) as a winning investment may seem counterintuitive for JPMorgan. Yet analyst Alex Yao has a buy rating and a $185 per share price target on the stock, suggesting a 91% upside potential.
Expecting a stock to double is not a rarity. Wall Street, though, tends to be a bit more timid in its outlook. Analysts often prefer singles and doubles rather than swinging for the fences, so let’s see why Baidu earns such big marks.
AI is likely the reason behind this pick. Just as nascent technology is influencing everything stateside, so is it having an impact overseas. Baidu promises to infuse its services with AI at every turn and is already doing so by leaps and bounds. Co-founder and CEO Robin Li previously said AI will “set the stage for sustained multi-year revenue and profit expansion within” Baidu’s Ernie ecosystem. Ernie is the company’s version of ChatGPT. Ernie Bot has already attracted 200 million daily users.
With the stock trading at 8 times next year’s earnings and less than the cash it has in the bank, Baidu does seem cheaply valued.
RIOT Platforms (RIOT)
Analyst Smith is also hyped about the potential RIOT Platforms (NASDAQ:RIOT) can bring to the market. He recently tweaked his price target on the cryptocurrency miner, raising it by $1 to $16 per share. He also reiterated his outperform rating on the stock. That gives RIOT a 49% upside if his thesis plays out correctly.
Considering last week’s Bitcoin (USD-BTC) halving event, you would not expect him to be so confident. Miners will see their Bitcoin rewards cut in half. Instead of receiving the current 6.25 bitcoins per block, RIOT will only receive 3.125 bitcoins. Yet Smith was adamant.
“$RIOT enjoyed lowest power costs per coin mined in 2023,” he told investors in a research note. “Post-halving, we expect it to be [among] two lowest cost producers given its scale and attractive power contracts.”
RIOT Platforms stock soared, rising 13% on the news. That’s not nearly enough to wipe out the trading deficit it has racked up. Shares are down 50% from their 52-week high. But if the JPMorgan analyst is right, the halving event could see RIOT stock achieving break-even status.
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.
