The bear market has unleashed selling pressure many investors haven’t seen in two decades. Some stocks have been obliterated, suffering declines in excess of 80% or 90%. Lost in the rubble are some stocks with serious potential. Specifically, we’re embarking on the task of finding stocks with 1,000% upside potential.
Finding the next double or triple is hard, but not impossible. But finding a potential 10-bagger is much more difficult.
After all, if it was easy, everyone would be rich. In addition to solid fundamental research, supportive market conditions and a good deal of luck, investors searching for stocks with 1,000% upside potential need patience. Gains like that don’t happen overnight. Quite the contrary. It typically takes years or decades to see this kind of life-changing return.
But just because something isn’t probable doesn’t mean it’s not possible. So, let’s look at some stocks with 1,000% upside potential.
Stocks With 1,000% Upside Potential
DigitalOcean (DOCN)
Shares of cloud infrastructure provider DigitalOcean (NYSE:DOCN) have been absolutely hammered, falling 65% in 2022 and nearly 80% from their all-time high, made roughly a year ago. Not even better-than-expected revenue and earnings were enough to stem the tide of selling, with shares falling nearly 5% today following the release of the company’s third-quarter results.
The company beat on the top and bottom lines. Revenue jumped 37% year over year to $152.1 million, while average revenue per customer rose 28% from a year ago to $79.22. Meanwhile, DigitalOcean reported an adjusted quarterly profit of 38 cents a share, well ahead of the 23 cents Wall Street was expecting. Yet, the stock sold off on disappointing fourth-quarter guidance, with management lowering its revenue and profit forecast. However, they upped their full-year guidance based on the strong Q3 results.
Admittedly, the cloud industry is going through a rough patch. But research shows the global cloud computing market is expected to grow at a compound annual rate of 15.8% through 2028, surpassing $1 trillion.
For its part, DigitalOcean has a three-year revenue growth rate of 25.4%, which is better than nearly 85% of its peers. Five years from now, my gut says DOCN stock will be significantly higher.
Confluent (CFLT)
Data streaming platform operator Confluent (NASDAQ:CFLT) is down 73% on a year-to-date basis and 78% from its all-time high, made roughly a year ago. Following the release of better-than-expected Q3 results after the close on Nov. 2, shares initially rallied as much as 17% the next day before closing the day up just 1%. Since then, CFLT stock has fallen around 9%.
The post-earnings response was a bit surprising given the fact that the company beat on the top and bottom lines. Revenue was up 48% year over year to $152 million, while cloud revenue more than doubled to $57 million. Meanwhile, the company’s Q4 and full-year revenue and EPS guidance exceeded expectations.
Currently, analysts expect revenue to increase 49% this year and 32.5% next year, while losses are forecast to decrease. Of course, there’s no love for growth stocks on Wall Street right now, but that will change eventually. I don’t know how long it would take to bag a 1,000% gain in CFLT stock, but it seems like one that could go the distance.
Twilio (TWLO)
Cloud communications platform operator Twilio (NYSE:TWLO) is down 83% so far in 2022 and 90% from its all-time high, made in February 2021. At that time, it seemed Twilio could do no wrong. Investors bid the stock up to over $400 a share even though the company had yet to turn a profit.
But as the focus on Wall Street shifted to earnings from revenue, investors abandoned the stock. It didn’t help that Twilio’s impressive revenue growth is forecast to slow to the high teens over the next two years, down from an estimated 34% this year.
Shares cratered nearly 35% in a single day on Nov. 4, after the company released its Q3 results. Revenue rose 33% year over year to $983 million. However, its loss from operations roughly doubled from a year ago to $457 million and management’s forecast disappointed.
A number of analysts have since downgraded the stock, and it’s safe to say sentiment is in the dumps. But keep in mind that the company is still expected to grow revenue by double digits and that the company is working to rein in costs. When the next bull market starts, beaten-down tech stocks like TWLO are likely to lead the way higher, provided the company can find its groove.
Of course, I have doubts that TWLO stock can ever regain its all-time high of $457.30. However, if it does, that would be a gain of nearly 930% from current levels.
JumiaTechnologies (JMIA)
Shares of the African e-commerce platform Jumia Technologies (NYSE:JMIA) are down 65% year to date and 94% from their all-time high of just below $70 in February 2021. In the past two days alone, the stock has fallen 18%, hitting its lowest level since May 2020.
Jumia is building out its e-commerce network throughout the second-most populous continent in the world with the goal of becoming the dominant online retailer.
The recent sell-off followed news that the company’s co-CEOs Jeremy Hodara and Sacha Poignonnec were stepping down immediately. “We want to bring more focus to the core e-commerce business as part of a more simplified and efficient organization with stronger fundamentals and a clearer path to profitability,” the company said in a press release.
While this may benefit shareholders in the long term, the profit focus could come at the expense of growth. Currently, though, analysts expect revenue growth of 31% this year and 23% in both 2023 and 2024. While this is a more-than-respectable level of growth, these estimates could be lowered if the economy continues to languish.
There are plenty of risks with JMIA, but also plenty of potential reward. A move to $44.11 from the current level would deliver a gain of 1,000%, which would still be more than 50% below its high.
Olaplex (OLPX)
Shares of the hair care products manufacturer Olaplex (NASDAQ:OLPX) are down 84% on a year-to-date basis and 85% from their all-time high, made in December. This included a 57% single-day plunge in mid-October after management cut its full-year guidance and its COO resigned.
The odd thing is, analysts still anticipate nearly 18% revenue growth this year and 7.5% earnings growth. That’s as shares now trade at roughly 10 times earnings.
Last month’s dramatic plunge seems like an overreaction. However, it’s certainly possible this penny stock could decline further. If shares fall to the $2.75 level, a return to their all-time high above $30 would provide investors with a 1,000% return.
— Brett Kenwell
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Source: Investor Place