There's no question that the best way to generate long-term wealth is investing in the stock market and holding on for years, if not decades. That doesn't mean investors won't have their resolve tested -- and the current downturn is a great example. Over the past year, the tech-heavy Nasdaq Composite has cratered 34% from its November high and continues to languish in bear market territory.
That said, investors who have been around the block a few times know one thing for certain: In the midst of a bear market, good and bad stocks alike fall in tandem. The result is a batch of compelling opportunities for investors with the resources and mindset to deal with the ongoing volatility.
In fact, Wall Street is surprisingly optimistic about the prospects of some tech stocks. Here are three candidates set to soar 89% to 216% over the coming 12 months, according to Wall Street.
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HubSpot
HubSpot (HUBS 2.55%) has evolved from its humble beginnings as the leader in inbound marketing. The company now boasts an impressive array of customer relationship management tools, arranged into "hubs." These broad categories include marketing, sales, service, a content management, and operations. As the result of these expansions, HubSpot's total addressable market is expected to crest $72 billion by 2027, a massive opportunity considering its 2021 revenue was just $1.3 billion.
The company continues to attract new users at a brisk pace. In the second quarter, customers grew 25% year over year, while the average revenue per customer (ARPU) climbed 10%. These factors helped drive total revenue up 36%, while adjusted earnings per share (EPS) climbed 4%.
Of the 27 analysts who cover HubSpot, 24 rate the stock as a buy or strong buy -- and none recommend selling. Furthermore, Wall Street's consensus 12-month price target represents potential upside of 54%.
However, Truist analyst Terry Tillman is much more optimistic than his Wall Street peers, assigning a price target of $500 and a buy rating on the shares. He cites the company's resilient results and strong execution. If his research is on the mark, the stock could surge 89% by this time next year, enriching shareholders along the way.
Okta
One need only peruse the latest headlines to understand the growing need for independent identity verification and access management services. Fortunately, that's right up Okta's (OKTA -0.10%) alley. The company's cloud-native services have among the broadest reach around, with over 7,000 integrations. Okta is trusted by more than 16,400 global brands to protect their digital interactions with employees, customers, contractors, and vendors.
This helped push Okta's second-quarter revenue up 43% year over year, while subscription sales climbed 44%. Its current remaining performance obligation (RPO) -- which provides insight into upcoming results -- climbed 36%, so the future looks bright.
Of the 31 analysts who cover Okta, 19 rate the stock as a buy or strong buy -- and not a one recommends selling. Most analysts are pretty bullish on the company, which boasts a consensus 12-month price target that's 76% higher than its current price.
One of Wall Street's finest believes his peers are underestimating Okta. JMP Securities analyst Trevor Walsh has a $145 price target and an outperform (buy) rating on the shares. He's particularly bullish about the rise of "zero trust" frameworks as the prevailing strategy for customer identity and access management, particularly given Okta's position in the space. If his enthusiasm is well placed, Okta could soar 167% over the coming 12 months.
MongoDB
MongoDB (MDB -2.10%) isn't a household name among investors, but the company is working to change that. Its cloud-centric database has the ability to store messy data -- think photos, social media posts, video and audio clips, and even full documents -- in ways that legacy database providers simply can't match.
Customers continue to flock to its fully hosted, multicloud, database-as-a-service (DBaaS) product, Atlas, at a dizzying pace. The result is revenue that isn't just growing, but actually accelerating. In its fiscal 2023 second quarter (ended July 31), revenue climbed 53% year over year, up from 44% growth in the prior-year quarter. To be clear, MongoDB isn't yet profitable, as the company works to "fully capitalize on our long-term market opportunity," according to management.
Of the 24 analysts who cover MongoDB, 18 rate the stock as a buy or strong buy -- while none recommend selling. It's hardly surprising, then, that Wall Street's consensus 12-month price target represents potential upside of 79%.
One Wall Street analyst, Tigress Financial analyst Ivan Feinseth, is much more bullish on MongoDB, with a price target of $575 and buy rating on the shares. MongoDB's open-source cloud-native offering continues to drive new customer wins, according to the analyst, who calls the pullback a "major buying opportunity." If he's right, the stock could soar 216% from here.
A word on valuation
Eagle-eyed investors will have detected a common thread in these high-growth picks: They all come with equally high valuations. Even after the recent bear market declines, MongoDB, HubSpot, and Okta currently sell for eight times, six times, and four times next years' sales, respectively, when a reasonable price-to-sales ratio is between 1 and 2. Furthermore, the current macroeconomic uncertainty will likely be a source of ongoing price volatility over the short term, so investing in these stocks isn't for the faint-hearted.
That said, given their robust revenue growth, vast potential, and discounted prices, I'd submit these stocks are worthy of a premium.
