KEY POINTS
- Moderna is using its COVID-19 vaccine cash to invest in a promising pipeline.
- MercadoLibre has tremendous growth opportunities in the Latin American e-commerce and fintech markets.
- PayPal is shifting its focus to maximizing revenue per user, a strategy that could pay off nicely.
Their businesses continue to make lots of money. And analysts think the stocks could make investors a lot of money, too.
No one knows for sure how any given stock will perform in the future. That's true even of the highly paid analysts on Wall Street.
However, when those analysts like stocks of companies that are generating hefty profits and have tremendous growth prospects, it's worth paying attention. Here are three highly profitable stocks that Wall Street thinks can soar 49% to 79% over the next 12 months.
1. Moderna
Moderna is no longer the high-flyer that it was in 2020 and 2021. But Wall Street analysts think that the vaccine stock has an upside potential of 83% over the next 12 months.
Some might be skeptical about this bullish outlook for Moderna. After all, COVID-19 cases are declining in the U.S. Even Moderna CEO Stéphane Bancel believes that we could be nearing the end of the pandemic.
However, the coronavirus won't go away. Moderna's COVID-19 vaccines should continue to enjoy solid demand. And the company is generating enormous profits -- $7.3 billion in the first nine months of 2021. It's pouring much of this cash into research and development.
Moderna is developing combination vaccines for providing protection against multiple respiratory viruses, including COVID-19, flu, and respiratory syncytial virus (RSV). That's a strategy that could pay off handsomely for Moderna. Its pipeline programs target other viruses plus autoimmune diseases, cancer, and more.
With the company's huge opportunity and a more attractive valuation thanks to the sell-off in recent months, it could very well be time to buy Moderna again.
2. MercadoLibre
MercadoLibre has lost half of its market cap over the past six months. The stock hasn't lost its luster on Wall Street, though. The consensus estimate for MercadoLibre is that its shares could soar 90% over the next 12 months.
Analysts could be overly optimistic about MercadoLibre's near-term prospects if the stock market underperforms. It's hard for any stock to overcome a dismal overall environment. However, MercadoLibre's chances of delivering spectacular gains over the long run appear to be very good.
The company ranks as the indisputable leader in Latin American e-commerce, generating $417.4 million in profits during the first three quarters of 2021. This is a market that could nearly double within the next four years, according to Morgan Stanley.
MercadoLibre also has other growth opportunities in digital payments and logistics services. In particular, the company's Mercado Pago fintech products continue to pick up strong momentum. Many individuals in Latin America don't use traditional banking services, giving MercadoLibre a big potential growth market.
There's also another fintech stock that Wall Street really likes --PayPal Holdings. The consensus price target for the stock reflects an 80% upside potential.
However, it's important to understand the context. PayPal is intentionally shifting its focus from increasing the number of users to boosting revenue per active account. If the company's efforts are successful, this should lead to even higher profits over the coming years.
Like Moderna and MercadoLibre, PayPal should have massive long-term growth prospects. The company directly benefits from the increased adoption of e-commerce. It's rolling out QR code functionality in an increasing number of retailers that bodes well for future brick-and-mortar commerce profits as well. And PayPal's Venmo mobile wallet still has plenty of room to run.
Investors haven't been loving PayPal lately, though. Its shares have plunged 66% from last year's high even with the company posting nearly $4.2 billion in profits for 2021. One key reason behind this decline is that PayPal expects its user growth will slow.
