Five stocks poised for monstrous gains

 

Investing is not about making quick gains. Investing is a long-term game that requires a lot of patience and discipline. That being said, so it is always wise to look for which stocks have the best potential to reward investors with the biggest gains.

We want to take a look at five stocks that are currently poised to make big gains, but it is very important to remember that we are not suggesting these stocks will rise quickly, just that conditions are right for each stock to build on recent gains and continue to trend higher.

There are a couple factors that come into play when looking for stocks with high reward potential. The first thing you want to make sure of is that the stock does not appear to be trading in overbought territory. You can determine this by looking at where the stock is currently trading in relation to its earnings, but to get the full picture you need to look out into the future for how strongly the company is expected to grow earnings moving forward. A company that grows earnings will enjoy stock appreciation as shares move higher to maintain the stock’s P/E valuation.

You also want to look at recent performance. While it is tempting to jump into stocks that have been beaten up in hopes of a quick return, more often than not stocks move lower for a reason, and they do not always bounce. The better approach is to look for stocks that have recent strength, with potential for building on recent gains.

A final piece to the puzzle is to look where analysts see shares going. If you can find stocks with recent strength, good future growth estimates, and bullish price targets, you have the perfect recipe for stocks that are poised for big gains.

Visa Inc.

Payment processor Visa Inc. (V) has enjoyed solid gains over the last few months, and the stock is currently trading just shy of its all-time high. Despite the stock’s recent strength, the market continues to see upside. Earnings are forecast to rise 18.7% during the current year, and by 16.6% in 2018, which helps to justify its 45 price-to-earnings ratio. Looking ahead, the street expects earnings to grow, per annum, by 17.0% over the next five years, and if the company is able to hit its bullish growth estimates the stock will continue to reward investors moving forward. V is currently trading at $92.05, and analysts on average have a price target of $99.21 on the stock.

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Chart courtesy of www.stockcharts.com

Facebook

Social media giant Facebook (FB) has been a top performer over the last four years, and there is plenty of reason to expect more gains for investors moving forward. The company has done a fantastic job monetizing its mobile Facebook users, and it has other services such as Messenger and WhatsApp that also have big monetary potential. User growth is slowing for Facebook, but it does continue to grow, and will likely achieve 2 billion monthly active users during the current quarter. The company shattered estimates during its recent quarter, but the stock traded lower on fears over slowing user growth. Despite its strength, the stock has become a victim of its own success, and the high bar it has set for itself. If you consider that the company has around 2 billion active monthly users (1.94 billion at the end of last quarter) that means that roughly 25% of the entire world’s population is on the site at least once a month. That is remarkable, and with the average price per ad rising 14% year over year, revenues and earnings will continue to rise. Analysts see earnings growth of 14.2% this year, and 23.8% in 2018. Facebook is not done growing, and the stock will continue to trend higher. FB is trading at $150.21, and analysts have an average price target of $166.11 on the stock.

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Chart courtesy of www.stockcharts.com

Raytheon

Like most defense contractors, Raytheon (RTN) shares have enjoyed big gains since the recent presidential election. With President Trump promising to boost federal spending on the nation’s military, it is not a mystery why the defense sector has performed so well in recent months. Raytheon has a decent valuation, with a P/E of 20.5, and while earnings are forecast to grow a muted 0.5% during the current year, analysts expect to see 12.2% growth in 2018, and 9.0% per annum over the next five years. The company’s recent quarterly report in late-April showed better than expected results on both the top and bottom line, and shot the stock higher. The defense sector will remain attractive for the next few years as Trump boosts spending and analysts have an average price target of $170.09 on RTN, which is 6.6% above its current trading price.

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Chart courtesy of www.stockcharts.com

Celanese Corp.

Celanese Corp. (CE) manufactures chemicals that are used in a variety of sectors, including the automotive, medical, and food sectors. The company’s recent, and forecast growth is impressive, with earnings rising 14.5% per annum over the last five years, and forecast to rise 10.2% per year over the next five years. The growth estimates, in tandem with the stock’s 15.1 P/E ratio paints the picture of a stock that will continue to move higher. CE shares have rallied over the last six months, and its recent quarterly report in April showed better than expected numbers on both the top and bottom line. Analysts have an average price target of $96.90 on the stock, which is 11.4% above its current price.

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Chart courtesy of www.stockcharts.com

Celgene Corp.

Celgene Corp. (CELG) is a biotech company. Biotech stocks tend to be a bit volatile, and CELG is no exception, with a beta of 1.53. The stock’s volatility could result in a big move lower, but in CELG’s case, analysts see it resulting in a big surge higher. Analysts have an average price target of $143.08 on the stock, which is 19.7% above its current price. The stock has a rather high valuation, with a P/E of 44.9, but analysts expect big earnings growth, which justifies the valuation, and should help the stock climb towards its price target. On average, analysts see the company growing its earnings by 22.6% during the current year, and then by an additional 21.0% in 2018. Looking out further, the company is expected to grow earnings by 20.7% per annum over the next five years. Over the last five years the company has grow earnings per annum by 24.9%.

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Chart courtesy of www.stockcharts.com

Symbols: CE CELG FB RTN V
Michael Fowlkes

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.

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