The S&P 500 surged 28% over the last year, but Wall Street analysts still see plenty of buying opportunities across the stock market.

Adam Jonas at Morgan Stanley has set Tesla (TSLA -1.11%) with a 12-month price target of $345 per share, implying 71% upside from its current price of $202. Similarly, Sean Dunlop at Morningstar has given Etsy (ETSY 0.34%) a 12-month price target of $140 per share, implying 100% upside from its current price of $70.

Investors should always treat these short-term forecasts with skepticism, especially when they come from individual analysts. But Tesla and Etsy warrant further consideration given the potential opportunities involved.

1. Tesla

Tesla reported disappointing financial results for the fourth quarter, missing estimates on the top and bottom lines. Revenue rose just 3% year over year to $25.2 billion, a deceleration from 9% growth in the third quarter and 37% growth in the year-ago period. Additionally, non-GAAP net income dropped 39% to $2.5 billion as price cuts caused operating margin to contract. Management also warned that vehicle volume growth could be much lower this year as the company ramps up investments in its next-generation vehicle platform.

However, there were a few silver linings. First, price cuts should stop or even reverse as interest rates fall and demand rebounds, which could happen this year. Second, Tesla is the leader in battery electric vehicles, and its next-generation car could extend its addressable market by carrying a much lower price, perhaps just $25,000. Third, the company has achieved industry-leading margins in the past, and it could do so again as it deploys new manufacturing systems and leans into full self-driving (FSD) software and robotaxi services (i.e., autonomous ride-hailing).

To elaborate, the manufacturing system that Tesla will use to produce its next-generation vehicle could cut production costs in half and reduce its factory footprint by 40%, according to management. Similarly, its FSD software should become increasingly attractive as the product moves toward full autonomy. Tesla already sells FSD subscriptions to drivers, but it also plans to monetize the software through licensing deals with other automakers and robotaxi services. Ultimately, that transformation could push its gross margin to 70%, up from about 18% today, according to CEO Elon Musk.

With that in mind, electric vehicle sales are projected to increase 15% annually through 2030, while revenue generated by autonomous vehicles is expected to grow 22% per year during the same period, according to Grand View Research. That gives Tesla a shot at annual sales growth exceeding 20% through the end of the decade.

Indeed, Adam Jonas at Morgan Stanley expects the company to grow sales 23% annually over the next eight years. That estimate incorporates a substantial contribution from FSD software and mobility services, but the current valuation of 7.2 times sales would be cheap if Tesla hits that mark.

Investors who believe Tesla has a future in FSD software and robotaxi services should consider buying a small position today but not with the assumption shares will increase 71% any time soon. The near-term outlook is murky given the high interest rate environment and management's warning about lower vehicle volume growth in 2024.

2. Etsy

Etsy reported mixed financial results for the fourth quarter. Gross merchandise sales (GMS) declined about 1%, marking the third time GMS has declined in the last four quarters. But revenue still rose 4% to $842 million due to strong momentum in advertising services, and non-GAAP EBITDA increased 4% to $235 million.

Management also provided mixed guidance. The bad news is that Etsy expects a low-single-digit decline in GMS during the first quarter. The good news is the situation should improve from that point forward. The company believes GMS will return to growth in the second quarter as it realizes benefits from investments in product development and brand marketing.

Etsy is using artificial intelligence (AI) to improve search and discovery with the goal of engaging more buyers and boosting their purchase frequency. That strategy could be effective given that the company specializes in unique products like artisanal and handmade goods. Those items are difficult to curate, which can make search overwhelming. Etsy is using AI to not only surface relevant search results and ads but also to prioritize quality items from reliable sellers.

So far those efforts have yielded mixed results. Active buyers on the marketplace increased 3% year over year in the fourth quarter, though GMS per active buyer declined 4%. However, as I mentioned earlier, management believes GMS growth will reaccelerate throughout the year. That indicates the company is confident that investments in search technology and brand marketing will have a more meaningful impact in the near term.

With that in mind, the investment thesis is simple. Etsy operates the sixth-most popular online marketplace worldwide as measured by monthly visitors, and the company has distinguished itself from other retailers by focusing on non-commoditized inventory. That means Etsy is well positioned to benefit as e-commerce becomes more prevalent, economic conditions improve, and investments in the business bear fruit.

Indeed, Morningstar analyst Sean Dunlop believes annual revenue growth will return to the mid-teens by 2025. That makes its current valuation of 3.6 times sales appear rather cheap. The road ahead will probably be bumpy, and the odds of a 100% return in the next 12 months are virtually nonexistent. However, Etsy stock could certainly beat the market over the next five years.