2 Monster Stocks to Buy Before They Soar 150% and 630%, According to Certain Wall Street Analysts
1 week ago
0 5 minutes read
Tesla(NASDAQ: TTD) and The Trade Desk(NASDAQ: TSLA) generated monster shareholder returns of 555% and 163%, respectively, over the past five years. And certain Wall Street analysts think that momentum will carry into the future, as detailed below:
Analysts led by Tasha Keeney at Ark Invest have set Tesla with a 2029 target of $2,600 per share. That forecast implies 630% upside from its current share price of $356.
Matthew Cost at Morgan Stanley has set The Trade Desk with a 12-month bull-case target of $200 per share. That forecast implies 150% upside from its current share price of $80.
Here’s what investors should know about these monster stocks.
Despite losing market share in the U.S. and China, Tesla retained its leadership position in electric car sales in 2024. But the company struggled with weak demand throughout the year, driven by increased competition and high interest rates. And price cuts meant to lure potential buyers cut deeply into profitability, which led to a series of disappointing financial results.
In the fourth quarter, total revenue increased 2% to $26 billion, reflecting strong growth in the energy business offset by a decline in automotive sales. Meanwhile, operating margin contracted 2 percentage points, and non-GAAP net income increased just 3% to $0.73 per diluted share. Also noteworthy, Tesla reported an annual decline in vehicle deliveries for the first time in company history.
However, CEO Elon Musk shared good news on the fourth-quarter earnings call: This June, Tesla will begin offering autonomous ride-sharing (robotaxi) services in Austin, and other U.S. cities will follow shortly thereafter. “I expect us to be operating unsupervised activity with our internal fleet in several cities by the end of the year,” Musk told analysts.
Importantly, Ark Invest’s target of $2,600 per share assumes total revenue will reach $1.2 trillion by 2029, and that robotaxis will account for about $750 billion of that figure. But that implies annual revenue growth of 65% in the next four years. Even if Tesla has a booming robotaxi business by then, that estimate seems too optimistic when the entire ride-sharing market was worth less than $50 billion last year.
That said, demand for ride-sharing services could increase rapidly in the future as robotaxis reduce costs. For instance, Ark Invest estimates the addressable market will be $10 trillion by 2030. Assuming that estimate is correct, Tesla’s robotaxi revenue could theoretically hit $750 billion with less than 10% market penetration. But I am still very skeptical about the timeline.
Wall Street expects Tesla’s adjusted earnings to grow at 22% annually through 2026. That makes the current valuation of 147 times adjusted earnings look absurdly expensive. There is only one way that multiple looks sensible in hindsight: Earnings growth must accelerate substantially as Tesla monetizes robotaxis and robotics.
Investors that lack confidence in that narrative should avoid the stock. However, investors that believe Tesla can disrupt the mobility industry should own a position. Now is as good a time as any to buy a few shares, though I doubt the stock will return 630% by 2029.
The Trade Desk specializes in digital advertising. Its demand-side platform (DSP) helps ad agencies and brands automate, optimize, and measure data-driven ad campaigns across digital channels. It was among the first ad tech companies to add artificial intelligence to its software, and CEO Jeff Green says it still has “the most advanced data-driven decision-making platform” in the industry.
The Trade Desk competes giants like Alphabet and Meta Platforms, but its independence is an important advantage. Specifically, The Trade Desk does not own ad inventory, which eliminates the conflict of interest inherent to many competitors. For example, Alphabet has a clear incentive to steer media-buyers toward advertising inventory on Google Search and YouTube.
Additionally, because The Trade Desk does not compete with publishers (companies that sell ad inventory), those publishers willingly share data. That means The Trade Desk can offer clients measurement capabilities not available on competing platforms. For instance, the company has partner with many the largest retailers, such that it has “the industry’s richest retail data environment,” according to Jeff Green.
The Trade Desk delivered disappointing financial results in the fourth quarter, missing its revenue guidance for the first time in 33 quarters. Specifically, revenue increased 22% to $741 million, well short of the forecasted $756 million, and non-GAAP earnings increased 44% to $0.59 per diluted share.
Jeff Green attributed the revenue shortfall to a “series of small execution missteps,” and he detailed changes the company has made to correct the problems. That includes reorganizing to improve efficiency, building relationships directly with brands rather than working exclusively with ad agencies, and shifting product development to small weekly updates rather than larger but less frequent releases.
Importantly, Morgan Stanley’s bull-case target of $200 per share assumes revenue grows at 29% annually through 2027. That is plausible given that ad tech spending is projected to increase at 22% annually through 2030. But investors would also need to afford The Trade Desk a much higher price-to-sales multiple, which makes the $200-per-share target a long shot at best.
However, The Trade Desk is still an attractive investment. The stock currently trades at 44 times forward earnings, a substantial discount to the two-year average of 57 times forward earnings. Investors with a time horizon of at least three to five years should feel comfortable buying a position today.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Tesla and The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Tesla, and The Trade Desk. The Motley Fool has a disclosure policy.
