In mid-July, the S&P 500 index touched highs of 5669. From those all-time highs, the index has already corrected by 8%. Macroeconomic and currency factors in Japan unexpectedly triggered a sharp correction quickly. There is a sense of caution, which has translated into lower speculative activity.
However, even if we leave out meme ideas, some stocks can double within the next six months. This column focuses on three fundamentally strong ideas that are positioned for a big rally.
An important point is that investors must increasingly focus on fundamentals as market sentiment remains cautious. Instead of looking at speculative buys, it’s a good idea to consider stocks representing companies with potential business catalysts for a big rally.
Based on positive business or financial developments, let’s discuss three stocks that can double within six months.
IAMGOLD (IAG)
IAMGOLD (NYSE:IAG) is an attractive under-the-radar gold miner. After touching highs of $4.6 in May, IAG stock has declined to $3.7. This is a good buying opportunity in a stock with an attractive forward P/E of 13.8.
The first reason I am bullish on IAG stock is the outlook for gold. The precious metal trades at $2,413 an ounce and should see further upside in the next few quarters. Factors such as geopolitical tensions and the likelihood of multiple rate cuts will trigger a rally for gold. IAMGOLD will be positioned to benefit from the higher realized price, which will translate into swelling cash flows and a possible initiation of dividends.
The second reason for the bullishness is the commencement of production from the Côté gold mine. Earlier this month, IAMGOLD announced that the mine had reached commercial production. With the ramp-up in progress, production growth will support revenue and cash flow upside. The positive production growth momentum will likely be sustained in 2025, and I expect IAG stock to discount this factor in the coming months.
Joby Aviation (JOBY)
Joby Aviation (NYSE:JOBY) is a fundamentally strong flying car company positioned for a big rally in the coming months. Although JOBY stock has been largely sideways in the last six months, considering the following factors, I expect a strong breakout on the upside.
First, Joby Aviation is positioned to commercialize eVTOL in the United States in 2025. The company has already completed 1,500 full-scale eVTOL flights. It’s worth noting that Joby has also applied for aircraft certification in Australia. I expect aggressive geographic expansion in the next 24 to 36 months.
Further, Joby reported a cash buffer of $924 million as of Q1 2024. With high financial flexibility, the company is focused on scaling up manufacturing operations, which is likely to support robust growth in 2025 and beyond.
In June, Joby acquired Xwing’s autonomy division. The latter has completed 250 fully autonomous flights and more than 500 auto-landings. With this acquisition, Joby expects to deepen its partnership with the U.S. Department of Defense. Any new DoD orders would be a catalyst for upside.
Marathon Digital (MARA)
Bitcoin (BTC-USD) has corrected sharply in the last few trading days. I see this decline as a good buying opportunity. With multiple rate cuts on the cards in the next 6 to 12 months, I expect a strong comeback for Bitcoin. One way to benefit from the digital asset rally is to expose yourself to Bitcoin miners. Marathon Digital (NASDAQ:MARA) is fundamentally strong and looks undervalued.
Besides the upside in Bitcoin, the catalyst for MARA stock upside is aggressive expansion. The company ended Q2 2024 with an energized hash rate capacity of 31.5EH/s. Further, Marathon expects to increase capacity to 50EH/s by the end of the year.
It’s worth noting that for Q2, Marathon reported revenue growth of 78% on a year-on-year basis to $145.1 million. Considering the expansion plans, top-line growth will likely remain stellar. I must add here that Marathon has a strong balance sheet. The company ended Q2 with a cash buffer of $1.4 billion. This will allow the Bitcoin miner to pursue aggressive expansion beyond 2024.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
