Sometimes, small, under-the-radar stocks are the ones to deliver explosive gains. That's because they often have a very low market value -- and a bit of good news easily sends them soaring. But these days, even some top stocks hold potential to skyrocket. Many well-known companies saw their share prices sink last year as the economy weakened.
Economic woes aren't over. But any signs of recovery or a bit of good news that may boost earnings could be enough to send certain struggling stocks considerably higher. After a tough 2022, investors may feel ready to look into the long term and bet on future winners. Let's check out five potentially explosive stocks to buy this year.
1. Amazon
Amazon (AMZN -2.56%) shares sank 49% last year. And that's left the stock at its cheapest in relation to sales since 2015. Why is this a bargain? Because Amazon's long-term prospects remain bright.
Yes, Amazon is facing challenges today. Higher inflation has increased its costs and is weighing on the buying power of those who shop on Amazon. But Amazon is improving its cost structure and aims to cut 18,000 jobs.
The company also last year increased investment by $10 billion in a high-growth area: cloud computing. Amazon Web Services (AWS) still is reporting double-digit growth in revenue even as customers have scaled back spending. The cloud-computing market is growing in the double digits. AWS, the global leader, stands to benefit over time.
The e-commerce market, too, is forecast to grow in the double digits this decade. This is more good news for Amazon.
It's impossible to predict when Amazon stock will take off. But any improvement in earnings or positive signs from the economy could be the trigger.
2. Home Depot
Home Depot (HD 0.74%) stock slid in 2022 even as the world's biggest home improvement retailer continued to report earnings growth. In recent months though, the shares have started to rebound. So big gains could be on the horizon, especially considering Home Depot's bargain valuation. The stock trades for less than 20 times forward-earnings estimates.
In spite of today's economic situation, Home Depot's two big customers -- the do-it-yourself crowd and professionals -- continue to shop for home improvement projects. And the pros say their backlog of projects remains strong. This is key because it gives us visibility on the coming months.
The pro market also represents a big growth opportunity for Home Depot. The size of this market totals $450 billion. And to grow here, Home Depot has launched initiatives to streamline the shopping experience for this customer.
An example is appliance delivery. Now, Home Depot's market delivery operation manages 100% of it, and that's resulted in more on-time deliveries. This should help keep customers coming back.
And all of these points make Home Depot a stock that could take off at any moment.
3. Starbucks
Starbucks (SBUX 0.53%) is reporting record revenue and growing the customers responsible for a great deal of spending in its shops: Starbucks Rewards members. In the most recent quarter, revenue rose 11% to $8.4 billion. And active rewards members topped 28 million.
But things may be getting even better for the coffee shop giant. Starbucks has launched a three-year reinvention plan meant to boost growth. The goals include 10% to 12% annual revenue growth and 15% to 20% non-GAAP earnings-per-share growth.
To get there, Starbucks plans on investing in its shops to make sure they match what coffee drinkers want, like various pick-up and delivery options. Starbucks also is betting on drinks innovation and driving growth in its second-biggest market -- China.
Last year, Starbucks shares fell 15%. But they've climbed 21% in the past three months.
At the same time, Starbucks shares trade for 31 times forward-earnings estimates -- down from more than 40 a year ago. A successful reinvention plan could lead to major share-price gains from today's level.
4. Moderna
Moderna (MRNA -0.58%) shares fell out of favor early last year for one big reason: Investors worried about COVID-19 vaccine sales in a post-pandemic world. But Moderna has offered us clues about the future of the vaccine market. And the company has potential product launches -- outside the coronavirus program -- that could happen over the next few years.
Let's talk coronavirus first. This year represents a transition -- from selling vaccine doses to governments to selling directly to healthcare providers. So, this year's sales level may not reflect the full potential for annual booster sales. The change may result in a 400% per-dose price hike. Moderna expects coronavirus boosters to eventually follow the flu vaccine market. That could result in significant recurrent revenue.
As for programs beyond the coronavirus, things look positive here too. Moderna has three potential blockbusters in phase 3 trials: vaccine candidates for flu, respiratory syncytial virus, and cytomegalovirus. And the biotech is increasing its investment in research and development by more than 35% to $4.5 billion this year.
Moderna stock has climbed 51% over the past three months. And this could be just the beginning.
5. Crispr Therapeutics
Crispr Therapeutics (CRSP -1.98%) slid 46% last year. Investors shied away from riskier assets such as biotech stocks without products on the market. But Crispr may not be in that category for much longer.
The company and partner Vertex Pharmaceuticals have submitted exa-cel, their candidate for blood disorders, for regulatory review in the U.S., Europe, and the U.K. An approval could be big for Crispr for a couple of reasons. First, it validates Crispr's gene-editing technology. Second, it offers product revenue, and this revenue could be significant.
Exa-cel is a one-time treatment candidate for beta thalassemia and sickle cell disease. These illnesses today have limited treatment options. So exa-cel could become an important product.
Crispr also is making progress on other pipeline candidates. Based on positive trial data, Crispr is moving immuno-oncology candidate CTX-110 into a phase 2 trial. This trial may offer enough data to allow Crispr to apply directly for approval.
Potential approvals of exa-cel, and later CTX-110, could offer plenty of fuel for Crispr shares to rocket higher.
