The unpredictability of the stock market often mimics a magician pulling a rabbit out of a hat – surprising yet entertaining. Last Friday, a robust jobs market report did nothing to hint that interest rate cuts are near, yet the Dow Jones Industrial Average and the S&P 500 defied expectations by climbing around 1%, proving that the market can spin gold out of thin air.
Despite speculations that growth stocks wouldn’t be the magic wand pushing indices higher following last year’s roaring comeback, a historical look reveals that downturns are usually followed by vigorous rebounds. The rhythm of the markets showcases that bull markets often span years, whereas bear markets dwindle in less than 18 months.
Consequently, Wall Street’s overpowering optimism for most stocks comes as no surprise. An optimistic outlook clouds the sky for the three companies under our microscope today, with analysts forecasting growth ranging from a whopping 123% to even more. The question remains: Have these finance wizards uncovered the golden ticket to hidden treasure in the market?
AMC Entertainment (AMC)
Like a phoenix rising from the ashes, movie theater operator AMC Entertainment (NYSE:AMC) suffered a brutal hit from the pandemic and is still struggling to find its footing. With its stock plummeting 95% from the peak it hit in July last year, one would think hope is a rare commodity. However, analysts beg to differ, foreseeing a 137% surge in the stock’s value within the next year. Amidst the mixed signals, a consensus sell rating persists on AMC stock, yet even the most conservative estimates paint a picture of potential growth at 57%. But how solid is this ground?
B. Riley Securities analyst Eric Wold has been on a rollercoaster with his price predictions for AMC Entertainment. From a high of $45 per share last September down to $8 a share in March, the ride has been jarring. Wold’s neutral stance on the stock persists with a hold rating.
TheStreet.com emphasizes Wold’s acknowledgment of AMC’s strong earnings report, credited to its distribution of concert films featuring artists like Taylor Swift and Beyonce. While pointing out a possible route for boosting revenue through strong concession sales, Wold justified his decision to slash the target price from $12 to $8 per share due to delays in the release of anticipated movies this year.
Yet, the harsh reality looms large. With theater attendance trailing pre-pandemic levels and a drought of blockbuster movies along with the rise of alternative entertainment platforms, the path to recovery seems arduous for cinemas. So, while Wall Street sees potential for AMC Entertainment stock to double or even surpass that mark, prudent investors might want to set their sights elsewhere for now.
Archer Aviation (ACHR)
Source: T. Schneider / Shutterstock.com
In a different realm, the spotlight shines on the robotaxi marvel called Archer Aviation (NYSE:ACHR), with shares diving 30% in 2024 but soaring nearly 60% in the past year. Analysts are raving about this electrical vertical takeoff & landing (eVTOL) virtuoso, predicting a doubling of its value. The median target price stands at $9.60 per share, a robust 123% over its current $4.30 price tag. Unlike the hesitant stance on AMC, Wall Street echoes a resounding buy rating on Archer Aviation.
The air is ripe with optimism for Archer Aviation stock’s future. The eVTOL landscape is being painted from scratch, with Archer and competitors like Joby Aviation (NYSE:JOBY) and Lilium (NASDAQ:LILM) on the edge of commercial launches.
While investing in such a scenario usually carries high risks, the eVTOL sector stands on the cusp of reality. Despite the risks surrounding ACHR, the company enjoys solid backing not just from the aviation and automotive industries but also from government entities. The Federal Aviation Administration (FAA) has been surprisingly nurturing and cooperative with Archer, guiding them towards the skies.
Xpeng: Can the Electric Vehicle Giant Weather the Storm?
Archer Aviation: Navigating the Skies
Archer, a prominent player in the electric aircraft industry, has its sights set high with an impressive order book for 700 aircraft awaiting FAA approval. The United Arab Emirates stands ready to embrace Archer’s innovation, allowing for an immediate foray into the robotaxi service market upon FAA clearance. While Wall Street may have frowned upon Archer’s recent earnings report, such fluctuations are commonplace for companies in the developmental stages. Analysts might be underestimating the full potential of the Archer Aviation stock amidst this turbulence.
Source: THINK A / Shutterstock.com
The Chinese electric vehicle heavyweight Xpeng (NYSE:XPEV) has captured the attention of Wall Street, despite facing a challenging year marked by a 50% drop in share value as global EV sales stagnate. While Xpeng noted a modest 20% uptick in deliveries in Q1, this pales in comparison to the meteoric 171% surge achieved in Q4 of 2023. Alarming parallels in the sales slowdown are seen with Tesla (NASDAQ:TSLA) and domestic competitor BYD (OTCMKTS:BYDDY), raising concerns about sustained growth.
With analysts prophesying a bullish 140% leap in Xpeng stock, and even speculating a staggering 250% rise at the upper end of projections, doubts linger on the feasibility of such an outcome. Despite the recent delivery upswing, Xpeng doubled incentives on its G9 model SUV to barely skirt the lower boundary of its Q1 delivery guidance, hitting 21,821 units—only a third of the Q4 figures.
Though Xpeng’s stock may witness a modest rally from its current $7.40 per share, an optimistic scenario involving a twofold surge seems far-fetched, casting shadows over the lofty projections.
On the date of publication, Rich Duprey held a LONG position in KO and PG stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
