2 Stocks That Could Soar 38% to 42% In 2023, According to Wall Street

Whether you're a brand new investor or have seen your fair share of market ups and downs, there's no denying that stock market events of the past months have tested even the most seasoned traders. While it's important to regularly evaluate your portfolio's balance to ensure your investment theses remain intact and the composition of your holdings aligns with your current risk tolerance, a down market doesn't mean you need to avoid investing or rush to sell off your stocks. 

Assuming the thesis for companies you own or follow is still there, discounted share prices can present an incredible opportunity to buy more companies you love at record-cheap prices. On that note, let's take a look at two stocks that some analysts on Wall Street have high hopes for in the next year, but which have durable underlying businesses that can drive portfolio growth for years to come. 

1. Etsy

Several analysts estimate that Etsy (ETSY 2.86%) could realize a 12-month upside of about 38%. The stock is trading up by nearly 20% from the start of the year.  

Etsy is dominant in a remarkably targeted but underpenetrated segment of the overall e-commerce market. With its focus on vintage, unique, and handmade items, management says that Etsy.com alone could face a total addressable online market of nearly $470 billion. And it's only penetrated about 3% of that total market.  

Of course, Etsy has also acquired other businesses in recent years that can fuel growth beyond the Etsy.com platform in the future, including music gear marketplace Reverb, apparel resale marketplace Depop, and Elo7, known widely as "The Etsy of Brazil." Bear in mind, Latin America is one of the fastest-growing e-commerce markets in the world, and Brazil is the largest market within this region, controlling about 25% of all sales generated in the area.  

While the market hasn't been as kind to shares of Etsy over the last year, its underlying business is continuing to expand and mark impressive growth improvements from pre-pandemic levels. Case in point: Etsy's gross merchandise sales of $3 billion in the third quarter of 2022 represented a whopping 150% increase on a three-year basis. Meanwhile, Etsy's cohorts of active buyers, habitual buyers (buyers who spent more than $200 in the past 12 months and clocked six or more purchase days on Etsy), and repeat buyers were up 100%, 223%, and 125%, respectively, in Q3 2022 compared to the same quarter in 2019.

Etsy's competitive advantage in a fast-growing slice of the multi-trillion-dollar e-commerce market, not to mention the extremely low overhead costs it bears because it doesn't store or ship inventory, all bode well for its ability to ride out any near-term changes in consumer spending. Over the long term, people will continue to shop online, and the desire for unique and vintage items isn't going away either.

With a stash of $1.1 billion in cash and investments on its balance sheet at the end of Q3, Etsy is well-positioned for imminent choppy waters, but its overall growth opportunity poses a particularly compelling buy in the current market.  

2. Fiverr

Some Wall Street analysts currently estimate Fiverr International's (FVRR 4.07%) 12-month upside at 43% on the high end. Shares of Fiverr have jumped by about 22% from the beginning of January. Fiverr's volatile share movements over the last year haven't really been tied to concerning business developments, but rather to fluctuating sentiment about growth stocks in general. 

Fiverr boasts sellers on its platform ranging from lawyers to copywriters to voice actors, while buyers of the millions of services accessible on the platform range from small businesses to Fortune 500 enterprises. While Fiverr still isn't profitable -- and that's another point that may be keeping some investors at bay -- management is actively investing in the growth of its business to set it up for a durable position as one of the world's leading freelance platforms. And it appears to be working. 

In the 12 months leading up to the end of Q3 2022, the spend per buyer jumped 12% compared to the same time frame in the prior year. Revenue was up 11% year over year in the third quarter of 2022 to $83 million, while adjusted EBITDA totaled just shy of $7 million for the three-month period with a GAAP gross margin of 81%.  

Fiverr continues to upgrade its platform options for both buyers and sellers. Companies can use Fiverr's Talent Cloud to onboard and manage entire teams of freelancers both online and offline, an offering boosted by the company's acquisition of Stoke Talent in 2021. In addition, freelancers can pay for Promoted Gigs, which are advertisements to increase the visibility of their listed services to prospective buyers. 

As of Q3, Fiverr now offers two tiers of its paid Seller Plus program, which offers freelancers everything from advanced analytics to buyer activity insights to build out their business. Fiverr also continues to invest in subscription programs, one of which allows freelancers to sell ongoing gigs to clients for up to six months at a time. Fiverr's dedication to continually upgrading its experience for freelancers and buyers of gig services are moves that could pay off big time for the business and its shareholders in the next decade and beyond.