The Nasdaq Composite is a comprehensive tech-centric index that tracks the performance of more than 3,000 stocks listed on the exchange. In July, the index climbed to (another) all-time high, marking the 27th so far this year.
After a run of that magnitude, the Nasdaq is taking a well-earned rest, down roughly 8% from its peak (as of this writing). This has some investors concerned the rally is on its last legs, but many on Wall Street believe it has room to run.
UBS analyst Mark Haefele remains bullish. "All-time highs often generate investor concern that markets have peaked. Such worries are not supported by history," he wrote in a note to clients. XM Investment analyst Marios Hadjikyriacos agrees. "Stock markets are enjoying the best of all worlds, buoyed by a resilient U.S. economy and speculation that Fed rate cuts are just around the corner, helping to justify stretched valuations," he wrote.
Here are a couple of Nasdaq stocks that could still soar as much as 141%, according to select Wall Street analysts.
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Sirius XM Holdings: Implied upside of 121%
The first Nasdaq stock with significant upside is Sirius XM Holdings (SIRI +0.00%). The company has a virtual monopoly in the North American satellite radio services market. Sirius has 34 million paying subscribers, and its listener base jumps to 150 million listeners when factoring in Pandora, its ad-supported music streaming service. As a result, it boasts an unmatched audience.
However, macroeconomic conditions haven't been kind to Sirius over the past couple of years. Decades-high inflation has decreased buying power, forcing consumers to cut back on most nonessential spending. These economic headwinds have weighed on Sirius's business, pushing the stock down 49% over the past year. Add to that a general misunderstanding concerning the company's upcoming merger and the resulting reverse stock split, and the opportunity begins to come into focus.
In the second quarter, revenue declined 3% year over year to $2.18 billion, while earnings per share (EPS) of $0.08 was flat. Management noted that advertising revenue was also flat year over year but increased 10% sequentially. While paid subscribers declined nearly 1.5%, this was largely the result of unpaid trial subscriptions by a number of automakers. These trials generally lead to more paying customers.
NASDAQ: SIRI
Key Data Points
Despite the challenges of the past couple of years, some on Wall Street believe there are blue skies ahead. Benchmark analyst Matthew Harrigan has a buy rating on Sirius XM, with a price target of $6.50. That represents potential upside of 121% compared to Wednesday's closing price.
The analyst cites an investor disconnect and misunderstanding regarding the reverse stock split ahead of its third-quarter merger with tracking stock Liberty Sirius XM. He also believes investors aren't pricing in the "gaggle of strategic initiatives" management has taken to right the ship.
This presents savvy investors with an opportunity. Sirius XM sells for less than 9 times earnings, which suggests investors aren't pricing in any growth. Declining inflation and the resulting increase in discretionary spending should improve Sirius XM's growth, which could spark a rally in the stock price.
Celsius Holdings: Implied upside of 141%
The second Nasdaq stock with a boatload of potential upside is Celsius Holdings (CELH 0.73%). The company is a purveyor of energy drinks but has concentrated its efforts on healthier alternatives, carving out a profitable place in the market. Celsius is now the third-largest energy drink brand and has continued to generate remarkably robust growth, even while leading competitors Red Bull and Monster Beverage have spun their wheels.
As a result, Celsius is gaining market share, driving 47% of all industry growth in the second quarter. Indeed, this marks the third successive year the energy drink market has continued to climb, defying declines in the broader beverage category. The company's consistently strong performance and rising stock price led to last year's 3-for-1 stock split.
In the second quarter, Celsius reported record financial results in terms of revenue, gross margin, and profits. Revenue of $402 million grew 23% year over year, while diluted EPS of $0.28 jumped 65%. The company is still facing difficult comps thanks to sales that doubled last year as Celsius embarked on a partnership with PepsiCo. The beverage giant took an 8.5% stake worth $550 million and lent its expertise to the company's beverage distribution efforts.
NASDAQ: CELH
Key Data Points
Fears of decelerating growth have punished the stock, which has lost half its value over the past three months. Some on Wall Street view this as a buying opportunity.
Ladenburg Thalmann analyst Jeffrey Cohen maintains a buy rating and a $78 price target on the stock, representing potential 141% gains for investors compared to Wednesday's closing price. The analyst notes that Celsius is the leader in the functional energy drink market and continues to strengthen its position.
Celsius stock is still attractively priced at 31 times earnings, despite its growing market share and tremendous potential for upside.
