3 Stocks That Could Skyrocket In Next Bull Market

In today’s market, most companies are trading well below their previous highs. This creates opportunities for investors to buy potentially discounted stocks that could spike during the next bull market. Here are three sold-off stocks that could skyrocket potentially during the next bull run.

 

Planet Labs (NYSE:PL) is arguably one of the most promising tech startups in the investment world at the moment. The company has created an unparalleled Earth imaging system, allowing it to image the entire planet each day. More importantly, Planet Labs maintains a database of all of its images. This represents a trove of valuable data for enterprise, government and academic customers alike.

 

One of the most encouraging aspects of Planet Labs is its margin on new subscribers. Because the costs of its satellites and database management are almost entirely up front, adding new subscribers results in nearly pure profit. Planet’s margin on new subscription accounts is approximately 95 percent, and the demand for its services will almost certainly continue to draw valuable new customers.

Planet Labs has also delivered exceptional results recently. In Q2, the company pared its losses, reporting a loss of less than half of what analysts were expecting. Revenues, meanwhile, rose 59 percent year-over-year. Given that Planet is still in its early days, the company appears to have plenty of room left for growth.

 

Analysts expect Planet Labs to offer large upside in the coming 12 months. The stock’s median target price is $9, representing a potential gain of over 50 percent from current levels. Planet Labs also enjoys a unanimous Buy rating from all 8 analysts currently covering the stock.

 

Over the coming five years, analysts expect Planet Labs to grow at an average rate of 30 percent per year. This number may be even higher if Planet succeeds in developing its own suite of data analytics tools, something which is currently lacking in its business model. Given the high margins the company enjoys, it seems very probable that ongoing revenue growth will eventually bring Planet Labs to reliable profitability.

 

It’s important to note that Planet Labs is a very young and still relatively small company. As such, there are risks associated with investing in it. Given its growth potential and the value of its product, though, Planet seems to be a fairly conservative Buy at current prices.

 

PL trades at less than 12 times sales and only about 2.3 times book value. Unless Planet’s growth is significantly lower than expected or losses continue in spite of revenue growth, it seems that the share price is at a significant discount to its potential future value.

 

RingCentral (NYSE:RNG) is an SaaS company that offers communication and cloud computing solutions. The company’s products include video collaboration software, customer engagement solutions and contact center software.

 

RingCentral’s communications solutions leverage centralized cloud computing, giving the company a competitive advantage over legacy communications providers.

 

Even in today’s challenging environment, RingCentral is delivering impressive growth. In the most recent quarter, the company’s revenue rose 23 percent year-over-year, including a 25 percent increase in subscription revenue.

 

While losses widened over the previous year, management stressed that this was primarily the result of a one-time non-cash charge. On a non-GAAP basis, operating income increased 13.5 percent year-over-year.

RingCentral also appears to have considerable room left to grow. In the coming year, earnings are projected to grow by 47.25 percent, while net sales are expected to rise 25 percent in the current fiscal year. Over the next five years, analysts expect an annualized growth rate of 35.4 percent for RingCentral.

 

Like Planet Labs, RingCentral could deliver strong single-year returns. Analysts project a median price of $55 over the coming 12 months, up 48.5 percent from the most recent price of $37.04. Out of 29 analysts covering the stock, 21 rate RingCentral as a Buy.

 

RingCentral is an interesting case in the sense that it has massively sold off while continuing to gain market share in an extremely competitive business niche. The stock is down over 80 percent YTD, but the company itself continues to increase its sales at a rapid pace.

 

Given the company’s relatively small size and potential for future growth, it’s far from impossible that RingCentral could treble in the coming years.

 

IPG Photonics (NASDAQ:IPGP) is a manufacturing company specializing in fiber laser technology. The company develops optical fiber technology for communications, medical use and a variety of industrial applications.

 

One of IPG’s most promising segments is laser welding, a technology that is seeing an increase in demand due to electric vehicle manufacturing.

 

IPG’s short-term projected return is much lower than those of Planet Labs and RingCentral. The stock is projected to rise from its current price of $90.91 to a median target of $110 in the coming 12 months.

 

This would give it an upside of 21 percent. While analysts are more divided on IPG’s rating, the stock enjoys a consensus Buy rating based on coverage from 11 analysts.

IPG also appears to be trading at a reasonable valuation. The stock is priced at 18.4 times earnings and 2.95 times sales. The company also carries no appreciable debt, making it a relatively safe bet for solid returns, even in a rising interest rate environment.

 

While IPG Photonics certainly has potential, investors should expect the company’s immediate growth rate to be slow and steady. Laser welding and IPG’s other technologies are all important for modern manufacturing. With a possible recession on the horizon and manufacturers facing supply chain difficulties, however, IPG may not reach its full potential for some time.

 

IPG may also struggle for a while due to currency issues. In the company’s Q3 reporting, management noted that the strong US dollar had driven revenues down by 7 percent. It should be noted, though, that such currency imbalances are most likely transient.

 

In large part, IPG’s future is tied to that of the EV industry. Laser welding is a preferred technology for assembling battery components. The technology leads to more precise assembly and, ultimately, a more reliable battery. The ongoing growth in the electric car market could substantially benefit laser welding hardware providers like IPG.

 

Overall, IPG is a stock with a great deal of potential over the long term. Unlike Planet Labs and RingCentral, though, investors may have to wait to see substantial gains. The good news is that the expected rebound of more than 20 percent over the next year would likely provide investors with a sufficient short-term return to make up for a slower growth story at IPG.

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