Want a 99% to 239% Return? Try These Growth Stocks, Says Wall Street

After a robust 27% return in 2021, the S&P 500 index has lost 7.5% to start 2022. We're a little over three weeks into the year, but sentiment has shifted due to fears the Federal Reserve is likely to raise interest rates more quickly than expected, unravelling the gains of many high-growth technology stocks in particular.

But Wall Street firms have identified some enticing opportunities among the wreckage, and for patient investors, these two stocks could crush the market in 2022 (and beyond). Here's why.

Image source: Getty Images.

1. Micron Technology: implied upside of 99%

The semiconductor sector was red-hot in 2021 after the pandemic triggered a wave of production shutdowns that led to crippling chip shortages. It resulted in an environment where chipmakers like Micron Technology (MU -2.73%) could raise prices and operate with higher profit margins. With consumer technology quickly advancing, the demand for advanced semiconductors is soaring, and the company has been a big beneficiary as a result. 

Micron is a state-of-the-art manufacturer of memory and storage chips, which are used in everything from smartphones to large data centers. While traditional segments like the data center and gaming make up most of Micron's revenue, it's emerging technologies like the 5G network and electric vehicles that could drive the future.

For example, smartphones require significantly more processing power and memory to run on 5G compared to older networks like 4G or 3G, so as the technology continues to roll out globally, that presents Micron with a great opportunity. Similarly, electric cars enabled with autonomous capabilities need advanced semiconductors, which is a brand new market for the company. 

But in the here and now, Micron is still delivering substantial growth.

Data sources: Micron, Yahoo! Finance. CAGR = compound annual growth rate.

Micron stock trades at 14 times fiscal 2021 earnings per share. By comparison, the iShares Semiconductor ETF trades at a price-to-earnings multiple of 30, so Micron would need to more than double its share price just to trade in line with its industry.

Last month, Wall Street firm Rosenblatt Securities reaffirmed a $165 price target for Micron stock, representing 99% upside from today's price. But with its long-term potential powered by growing segments, that could end up being a conservative estimate.

Image source: Getty Images.

2. Offerpad Solutions: implied upside of 239%

The U.S. real estate market has been on a tear recently with the latest data on U.S. real estate prices from the Case-Shiller National Index showing 19% growth over the trailing-12-month period ended Nov. 2021. And as is the case with many other industries, technology has transformed the way consumers buy and sell houses.

Offerpad Solutions (OPAD -3.60%) operates an iBuying business model, meaning it purchases homes directly from willing sellers, renovates the properties, and then flips them for a profit. It's a risky operation when executed incorrectly, as evidenced by industry-leader Zillow Group's recent withdrawal from the segment. 

But Offerpad operates in just 17 geographical markets in the U.S., compared to Zillow's 35. That selectivity helps reduce risk. The results are clear: Offerpad's peak profit per home sold was $31,500 in the second quarter of 2021, compared to Zillow's peak of just $19,636, which affords Offerpad more room for error.

The company's revenue is soaring, and in the third quarter, management increased the midpoint of its 2021 full-year revenue guidance by $100 million.

Data sources: Offerpad, Yahoo! Finance. CAGR = compound annual growth rate.

Offerpad stock has fallen over 80% from its all-time high price of $20.97 set in Sept. 2021. Renewed concerns about the pandemic, rising interest rates, and Zillow's spectacular struggles in the iBuying segment have spooked investors. But with the stock trading at a price-to-sales multiple of just 0.6, it's close to rock-bottom, though risks remain if the company fails to turn a profit in the next couple of years.

But Wall Street firm JMP Securities is optimistic, maintaining a $12 price target for Offerpad stock in November, which represents 239% upside from here. For investors with some appetite for risk and a long-term approach, it could be a portfolio supercharger.