Over the long run, the stock market has proved to be a wealth-building machine. Even though corrections are commonplace, investors are typically doubling their money about once a decade.
But for a select group of high-growth stocks, simply doubling your money in a decade won't suffice. According to the high-water 12-month price targets from a group of Wall Street analysts, the following three supercharged growth stocks offer monster upside ranging from 179% on the low end to as much as 331%.
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Rivian Automotive: Implied upside of 218%
The first fast-paced company with significant upside potential is the hottest initial public offering (IPO) of 2021, electric vehicle (EV) manufacturer Rivian Automotive (RIVN 5.11%). Analyst Adam Jonas of Morgan Stanley boasts the highest price target on Wall Street for Rivian. If Jonas's $147 price target were to hit, it would represent an increase of 218% from where shares ended this past week.
Jonas's lofty projection is based on the expectation that Rivian will be producing 1.5 million battery EVs (BEVs) annually by 2030, and will be able to grow its software business from an estimated $641 million in 2025 to approximately $36 billion by 2040 as the installed base of Rivian BEVs grows.
Pardon the pun, but the bullishness surrounding Rivian does have some fuel behind it. In 2019, the company secured an order for 100,000 electric vans from e-commerce giant Amazon. Even before becoming a publicly traded company, this order provided some level of validation that Rivian was poised to become a major EV player. Also, keep in mind that Rivian's R1T electric truck looks to be in a class of its own with regard to luxury EV trucks.
Additionally, Rivian is sitting on a mountain of capital following its IPO. The company ended 2021 with $18.4 billion in cash and cash equivalents, which is allowing management to aggressively invest in production expansion efforts. For instance, $5 billion is being spent to build a manufacturing plant in Georgia that'll produce up to 400,000 EVs annually once it begins production in 2024.
But betting on Rivian to become a $130 billion company seems like a stretch when supply chain issues have cut expected EV production to 25,000 in 2022 from an estimated 50,000.
What's more, rising material costs have put Rivian between a rock and a hard place. Earlier this month, the company announced significant price hikes on its quad-motor models, only to walk back to those hikes on people who'd placed reservations with the company prior to March 1. As EV companies like Nikola and Lordstown Motors have shown, overcoming PR flubs can be very difficult. Suffice it to say, $147 doesn't look achievable anytime soon.
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Ocugen: Implied upside of 331%
A second high-growth stock with monster upside potential, at least in the eyes of one Wall Street analyst, is small-cap biotech company Ocugen (OCGN 7.87%). According to Robert LeBoyer of Noble Financial, Ocugen can hit $15 a share, which would represent jaw-dropping upside of 331% from where it closed this past week.
In LeBoyer's view, Ocugen's upside is tied to COVID-19 vaccine Covaxin, which in his view holds competitive advantages over other COVID-19 vaccines already in use in North America. The U.S. Food and Drug Administration (FDA) recently removed a partial clinical hold on Covaxin in the U.S., which officially clears a path for Ocugen to submit a biologics licensing application on the drug it's commercially licensed from Bharat Biotech.
Last year, Bharat Biotech ran a large-scale study involving Covaxin on 25,800 people in India. That trial produced a vaccine efficacy (VE) of 78%. Considering that there are billions of people worldwide still in need of initial COVID-19 inoculations and/or booster shots, we're still at a stage where new and effective vaccines are welcome on the global stage.
The issue for Ocugen is that its commercial agreement with Bharat concerning Covaxin only covers the U.S. and Canada. While these are traditionally high-margin markets, the U.S. and Canada have heavily invested in COVID-19 vaccines. A large percentage of the population for both countries have already been vaccinated and/or received booster shots. Further, new vaccine options with a higher VE than Covaxin are waiting in the wings.
To make matters worse, the FDA declined to grant Covaxin a pathway to emergency-use authorization (EUA) for pediatric patients aged 2 to 18. Despite the company announcing that it would continue to work with the FDA on a possible EUA path for pediatric patients, this revenue channel looks to be shut off.
Long story short, Ocugen still looks to be a ways away from having any chance of getting Covaxin approved for use in the U.S. -- and even if it's approved, there's little assurance it'll be used over other vaccines with higher VEs. LeBoyer's $15 price target is highly unlikely to be hit.
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Plug Power: Implied upside of 179%
The third growth stock with salivating upside is hydrogen fuel-cell solutions provider Plug Power (PLUG 1.89%). According to H.C. Wainwright analyst Amit Dayal, Plug Power can hit $78 a share, which would represent an increase of 179% from where shares ended this past week.
Dayal's high-water price target on Plug Power is based on an expansion of the company's green hydrogen network, and the ongoing deployment of the company's hydrogen fuel-cell-powered GenDrive units. With most markets promoting clean-energy solutions, Dayal anticipates the company's margins will improve across the board.
Plug Power really put itself on the map in early 2021 when it struck two major partnerships within a span of one week. In January 2021, SK Group took a 10% equity stake in the company and formed a joint venture to bring fuel-cell solutions (for vehicles and refilling stations) to numerous Asian markets. Roughly a week later, Plug and French auto company Renault forged a joint venture to tackle Europe's light commercial vehicle market. These deals signaled that Plug's fuel-cell solutions were about more than just powering forklifts in warehouses.
The company has also signaled its willingness to be a key next-gen energy player with acquisitions. In December, it completed its buyout of green hydrogen solutions company Frames Group, which furthers Plug's ambitions of becoming one of world's leading green hydrogen ecosystems.
While there's little question that developed countries are pushing for green-energy alternative to fight climate change, it's not yet clear if Plug Power has the solutions that'll be preferred. Even at a $28 share price, we're talking about a company with a greater than $16 billion market cap that's losing money and hasn't yet demonstrated if it can handle rapid scaling. This isn't to say that it won't be able to scale its ecosystem, so much as to point out that its valuation implies everything will go off without a hitch. Rarely is that the case with next-gen technologies and solutions.
Although Plug Power is a company people can hope is successful, it has a lot of questions to answer at its current valuation, let alone one that would be 179% higher.
