Wall Street’s price targets are not an absolute guarantee that a stock will reach a certain level. Things can change, and so can price targets. Also, they usually only look at where a stock might go over the next 12 months; they are in no way a long-term indication of where a stock might end up in the long term.
However, price targets can be helpful in discovering stocks that may have high potential for further growth. Three stocks that have a lot of upside potential (according to analysts) and are currently trading at cheap valuations are baidu (NASDAQ: BIDU), United Airlines (NASDAQ: UAI)And Enbridge (NYSE:ENB)Read below to find out why this stock could be a good buy right now.
Baidu: 80% increase
Chinese technology stock Baidu has long been an underperformer, losing more than 20 percent in five years, and investors are still not exactly optimistic. There are not only concerns about the Chinese government’s involvement in the company, but now fears that the country’s economy could grow more slowly.
But Baidu is a stock you could take a risk on. The company has a diverse business that includes cloud computing, search, and a popular chatbot called Ernie that reached 200 million users earlier this year. It’s an intriguing stock in the artificial intelligence (AI) space if you’re willing to take a little risk.
Things are not looking good for Baidu. Revenue in the first three months of the year rose just 1% to $4.4 billion compared to the same period last year. On the positive side, operating profit rose 10%. And with some promising opportunities on the horizon, particularly in AI, investors shouldn’t write off Baidu given its strong presence in a huge Chinese market.
Analysts believe the stock could reach $146, representing at least 80% upside potential from the current price. The stock’s price-to-earnings (P/E) ratio is also quite low, at just eight. While this carries some risk, investors could be fairly compensated with a rising price, given the low valuation the stock is currently trading at.
United Airlines: 91% increase
While the travel industry appears to have recovered since the pandemic-related closures, many airlines are struggling to win back investors. United Airlines’ stock, for example, has fallen more than 55 percent in five years. Analysts expect the stock to trade significantly higher, above $72, which would imply an upside potential of about 91% for the stock.
United is coming off a strong second quarter. Operating profit rose nearly 6% to nearly $15 billion for the period ended June 30. And net income of $1.3 billion was up 23% from the same period last year. Concerns about a slowing economy and a possible recession are weighing on investors and are likely keeping the stock from rising more than it needs to at this point.
With a dirt-cheap P/E ratio of just 4, this is another example where investors may be well compensated for taking on some risk. United could struggle during an economic downturn, but it’s still a top airline that should do well when the economy recovers. Buying and holding the stock could lead to strong returns over the long term.
Enbridge: 48% increase
Pipeline company Enbridge is the best-performing stock on this list and the only stock to have posted positive performance over the past five years, with its share price up 12% during that time. Analysts believe oil and gas stocks could have even more upside potential, predicting shares could rise above $55. And if that turns out to be true, you could make a profit of nearly 50% if you buy the stock today.
A good reason to hold the stock is the rising dividend. Enbridge has increased its payouts for 29 consecutive years and is already a fantastic dividend stock with a yield of about 7%, which is more than five times higher than S&P500 an average of 1.3%.
The Canadian company has been able to increase its dividend while expanding its business. Last year, it announced that it was selling several of its Dominion Energy Seeking to expand its presence in the U.S. market, the company cited a unique opportunity to acquire high-quality assets that would pave the way for it to become the “largest natural gas supply franchisee” in North America.
Enbridge’s finances could get much stronger, and they are already solid. The company’s distributable cash flow rose 3% to C$2.9 billion ($2.1 billion) for the period ended June 30. Distributable cash flow is how the company determines how much room it has to pay dividends. Since it continues to rise, it suggests that the current payout is fine and further increases could be on the way.
Enbridge shares trade at 18 times forward price-to-earnings and have risen recently, but they are still a good investment for long-term investors.
Should you invest $1,000 in Baidu now?
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David Jagielski does not own any stocks mentioned. The Motley Fool owns and recommends Baidu and Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.
3 Cheap Stocks Wall Street Analysts Think Can Rise at Least 48% was originally published by The Motley Fool
