The speed of growth of a given stock is much higher the smaller it is. Stock size is classified by market capitalization – current share price x number of shares outstanding – with large cap shares being above $10 billion. Generally speaking, once a stock reaches large cap status its growth prospects decline substantially.
Thus, it’s generally unreasonable to anticipate 50% returns over a year when it comes to large cap stocks. And while it may be generally unreasonable, it is not impossible.
Each of the large cap stocks discussed below are all expected to grow by 50% in value over the next 12 to 18 months. Let’s take a look at those shares and the reasons investors should be optimistic about them.
Large-Cap Stocks With 50% Upside: Illumina (ILMN)
Illumina (NASDAQ:ILMN) offers genomic analysis consumables in the research and diagnostics vertical.
Analysts at Canaccord recently reiterated their $130 share price for Illumina. Shares currently trade for $107, so there’s clearly plenty of upside baked in. The general consensus is the share prices will rise substantially higher, to $168. That would represent an increase of more than 50%.
The company is certainly headed in the right direction. It’s most recent earnings report showed that the company bested top and bottom line expectations for the first quarter. Otherwise, the company looks to be improving based on its decision to divest itself of GRAIL. That acquisition had come under scrutiny by the Federal Trade Commission for its monopoly potential over the cancer detection kit vertical.
That news is what prompted Canaccord to reiterate their $130 share price for Illumina. The high analyst price for ILMN shares stands above $250 which suggests extraordinarily high potential returns.
Sirius XM Holdings (SIRI)
Sirius XM Holdings (NASDAQ:SIRI) is a stock that remains seriously undervalued. That’s what Warren Buffett’s Berkshire Hathaway (NYSE:BRK-B) recently said with its investment in the firm. Buffett’s firm now controls more than 21% of shares overall following its recent investment. That investment will go a long way toward convincing on-the-fence shareholders of the penny stock’s investment worthiness.
Unsurprisingly, shares offer value with low multiples. However, low multiples also indicate low demand overall, but investors should be optimistic given that the company maintains a free cash flow exceeding $1 billion.
That strong cash flow will go a long way in allowing the company to maintain its strong dividend policy. That policy includes a dividend yielding 3.8% forward with a payout ratio of 0.29, leaving plenty of room for future dividend hikes.
Sirius XM Holdings offers penny stock return potential for investors with the backing of investing legend Warren Buffett.
Large-Cap Stocks With 50% Upside: VinFast Auto (VFS)
VinFast Auto (NASDAQ:VFS) continues to face a lot of trouble and is undoubtedly a risky investment at the moment. It’s also one that could just as easily double or go bankrupt. It’s understandable why some investors will choose to sit this one out. It’s easy to look at the recent fate of other EV manufacturers like Fisker (OTCMKTS:FSRN) and simply avoid VinFast Auto.
On top of that, the company is being probed in relation to an April crash that resulted in four deaths. The company is also currently engaged in a landlord lease dispute in California. The company admits that it suspended showroom payments in April seeking negotiations. The landlord counters that VinFast has not paid any rent since the beginning of May 2023 and has sued the company.
Meanwhile, the most recent earnings report showed that sales are increasing quickly, although at a rate that is lower than anticipated.
BeiGene (BGNE)
BeiGene (NASDAQ:BGNE) is a strong company overall and stock investors should not hesitate to buy at the moment. The company recently moved into the top 15 oncology firms by sales following a particularly strong quarter.
Total revenues reached $752 million in the first quarter, representing an increase of 82% on a year-over-year (YOY) basis. The company’s BRUKINSA drug was responsible for $489 million of those total revenues. It is what is known as a BTK inhibitor, the standard treatment in chronic lymphocytic leukemia. The drug recently received its 5th FDA approval and is now the broadest label treatment in the BTKi drug class.
While BeiGene remains a strong choice on the impressive growth of BRUKINSA, the company is not yet profitable. However, the strong results allowed the company to improve its operational losses by 30% in the first quarter. The consensus expectation is that the company’s $167 shares should rise above $250 and perhaps as high as $345.
Large-Cap Stocks With 50% Upside: Warner Brothers Discovery (WBD)
Warner Brothers Discovery (NASDAQ:WBD) is doing some things incredibly well and deserves attention for those positives. To me, the thing that stands out most is just how quickly the company’s cash position is improving.
Read through the company’s most recent earnings reports and that’s one of the things that jumps off the page. Warner Brothers Discovery managed to reach $585 million in operating activity cash production during the first quarter. That represented a $1.3 billion improvement on a YOY basis.
While top line results did contract, there are other positives to be taken from the earnings report. Namely, it’s likely that Warner Brothers Discovery will soon pass the 100 million DTC subscriber threshold. The company added $2 million such subscribers during the first quarter, increasing its total to 99.6 million.
The company is also managing to squeeze more money out of those customers. Its average revenue per user increased by 8% in the U.S. during that period and by 4% overall.
Baidu (BIDU)
Investors who take a look into the most recent earnings from Baidu (NASDAQ:BIDU) should be able to see a narrative supporting Chinese stocks. If that doesn’t apply to the entirety of the economy it remains true for internet companies like Baidu.
The company’s sequential results suggest that now is a good time to invest in China’s answer to Google. Revenues increased by 10% sequentially leading to a 110% increase in net income over the same time frame.
There’s clearly positives to be taken from the earnings report in a fundamental sense. The company’s fiscal position is improving. What I also think investors should be aware of is the fact that Baidu is one of China’s largest cloud providers. The company is heavily touting its AI investment into the cloud.
Investors are starting to actively look for reasons to invest in beaten down China equity. Baidu is going to pay off sooner or later and that will spike overall demand. The company’s investment in artificial intelligence could propel returns much higher.
Toronto-Dominion Bank (TD)
Toronto-Dominion Bank (NYSE:TD) continues to face regulatory scrutiny but will survive and in the meantime will reward investors.
The company continues to face significant scrutiny in regard to its anti-money laundering policies and alleged deficiencies therein. The company has set aside $450 million to cover fines it is likely to incur in relation to those weaknesses.
The result is that TD stock is currently very weak and undervalued. The company will survive however and that leads to an opportunity to buy shares on that weakness. Those who do will be rewarded with substantial income through a dividend that was last reduced in 1995. That dividend benefits from a healthy payout ratio of 0.5. It’s highly unlikely to face any reductions based on that ratio.
Even if that ratio were higher, I assume the company would do everything within its power to maintain the dividend given its current regulatory issues. In other words, investors should expect that Toronto-Dominion Bank will offer attractive income opportunities at the moment and price appreciation opportunities moving forward as the company puts its current issues behind it.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
