STEM - 3 for $3: Speculative Stocks to Buy on the Cheap
2024-04-09 12:49:39 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
In most situations, you want to stay on the tried-and-true approach, which leaves little room for speculative stocks. You can consider this arena as the equivalent to the longball approach in (American) football. Such plays make the highlight reels but they also have a greater chance of ending in disaster.
So, balanced teams – the type that win championships – feature strengths in both the running and passing components. However, in some situations, teams find themselves forced to go the passing route. In such circumstances, you need the high-leverage plays that stand the best chance of materializing successfully.
That’s basically what we have here with these speculative stocks. You can potentially see some tremendous gains but the risks are great as well.
D-Wave Quantum (QBTS)
Operating under the computer hardware sector, D-Wave Quantum (NYSE: QBTS ) develops and delivers quantum computing systems, software and services worldwide. Per its public profile , D-Wave offers Advantage, a fifth-generation quantum computer and Ocean, a suite of open-source Python tools. Notably, the company’s quantum-based solutions are utilized in multiple industries, including logistics, financial services and drug discovery.
For me, QBTS ranks among the speculative stocks under $3 thanks to the enormous potential. According to MarketDigits, the quantum computing market could reach a valuation of $4.45 billion by 2030 , representing a compound annual growth rate of 24.2% from 2023.
For the current fiscal year, analysts project D-Wave’s revenue to hit $16.64 million, implying 90% growth over last year’s print of $8.76 million. In 2025, sales could reach $35.7 million, implying 114.5% year-over-year growth.
Lastly, analysts rate shares a strong buy (based on assessments issued in April). Further, the average price target lands at $3, projecting a return of over 62%. Therefore, it’s an enticing idea for speculative stocks to buy.
Nerdy (NRDY)
Falling under the application software segment of the technology ecosystem, Nerdy (NYSE: NRDY ) operates a live online learning platform. Per its corporate profile , Nerdy features a purpose-built proprietary service that leverages multiple advanced technologies, including artificial intelligence. It offers relevancy mainly for students. It also provides a collaborative environment that could be adapted for multiple uses.
As with D-Wave Quantum, the excitement over NRDY stock centers on the addressable market. According to Straits Research, the online education sector reached a valuation globally of $40.6 billion in 2022. By 2031, the space could be worth $269.79 billion , representing a CAGR of 23.12%.
Wall Street experts project fiscal 2024 sales to land at $237.81 million. That implies 23% growth from last year’s revenue of $193.4 million. Further, fiscal 2025 could be a big year, with the top line expanding to $293.17 million, implying 23.3% YOY growth.
Analysts peg NRDY a consensus strong buy with a $4.66 price target, implying 64% upside potential. Therefore, it’s another idea for speculative stocks worth looking into.
Stem (STEM)
Conducting business in the infrastructure software category, Stem (NYSE: STEM ) operates as a digitally connected, intelligent and renewable energy storage network provider worldwide. According to its public profile , Stem offers energy storage hardware sourced from original equipment manufacturers (OEMs). As well, it provides edge hardware to support site data collection and real-time operations and controls.
For Stem, it could potentially rise alongside the underlying energy storage market. Per Mordor Intelligence, this arena may hit a valuation of $99.72 billion by 2029 . If so, that would imply a CAGR of 14.31% from 2024.
Wall Street experts are certainly hopeful that Stem can benefit from the rising demand and interest. For the current fiscal year, they’re looking for revenue to land at $672.15 million, implying 45.6% growth over last year’s print of $461.51 million. And for the next fiscal year, they’re targeting a top line of $875.39 million, implying 30.2% YOY growth.
Analysts rate STEM a consensus moderate buy with a $3.63 price target, projecting 79% growth. It’s volatile but could be a longshot candidate for speculative stocks to buy.
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On the date of publication, Josh Enomoto 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 .
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
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