These 3 hot stocks could dive more than 50% – If Wall Street is right

The stock market has been inundated with performing companies lately. A lot of stocks have doubled or tripled in the past year, and some have gained even more. And for many of these stocks, a good chunk of the gains has come fairly recently.

But Wall Street experts aren’t always so optimistic about these investments. For some of these now popular stocks, analysts have set price targets well below current levels. This suggests that the best on Wall Street believe their recent spikes in their stock prices have passed the bar – and that they could return to earth anytime soon.

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Below, we’ll take a look at three popular high-profile stocks, all of which have at least tripled since late October, and determine if any of them still have to work. Stock analysts are bearish – but there is more to the story.

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1. MicroStrategy

MicroStrategy (NASDAQ: MSTR) has seen incredible progress in the market recently – its stock has quadrupled since the end of October. However, this push has little to do with the core business of the business.

MicroStrategy is an application software developer that helps businesses analyze their data. It’s a fast growing niche lately, but MicroStrategy hasn’t reaped the rewards. Total revenue has stagnated for a decade now, as the company attempts to move to a subscription-based model less reliant on license revenue.

Last summer, however, MicroStrategy tapped into the cryptocurrency craze, claiming it would take the money it had on its balance sheet and use it to buy bitcoin. This tied the company’s stock to changes in the price of bitcoin, and as the cryptocurrency rose, it took MicroStrategy’s stock price with it.

Stock analysts were unable to follow. Citi raised its share price target to $ 75 per share on Friday, but did not change its sell rating on the share. Moreover, even the rise only took the price target to $ 325 per share – more than 50% below the $ 680 per share that MicroStrategy stock recovered on Friday morning.

Going forward, MicroStrategy’s fortunes will be almost entirely tied to bitcoin, especially as it is considering additional leverage to take a larger position in cryptocurrency. It could pay off, but Wall Street seems to think the share price is too high.

2. SunPower

The solar energy industry has performed well in the market lately. The industry leader’s share price SunPower (NASDAQ: SPWR) has climbed 230% since the end of October.

SunPower has done a little bit of everything in the solar industry at times, but recently it has made an effort to reduce its capital footprint by focusing on higher margin companies. It transformed its solar panel manufacturing division into a new company, Maxeon (NASDAQ: MAXN), and is now working to advance technological innovation in the solar arena, as well as the commercialization and delivery of cutting-edge solar products and services such as battery storage solutions.

SunPower recently brought in $ 55 a share, but stock analysts aren’t as enthusiastic about the company. The average price target among those hedging SunPower is just above $ 24 per share, which implies a decline of around 55% from current levels. The low target is $ 12 per share, which would represent a drop of almost 80% from here.

Even relatively optimistic analysts are losing some faith in SunPower. On Friday, Piper Sandler downgraded his solar stock rating from overweight to neutral, and while leaving his price target of $ 35 per share unchanged, he said the sharp rise in the share price did not appear to be. not have a good basic explanation. Without obvious catalysts to spur investor interest, SunPower might have a hard time climbing from here.

3. Appian

Finally, Appian (NASDAQ: APPN) has capitalized on the digital transformation underway across the world. The low-code software platform provider enables its customers to produce custom apps much faster and more efficiently, and Appian has seen tremendous growth in sales – and more particularly in recurring revenue. This helped to increase the stock by 240% in three months.

Appian is just one of many software as a service stocks that have sparked some controversy over their price movements. Its core business is definitely strengthening, but the magnitude of the recent rise in its stock prices has troubled many analysts. That’s why, even though it trades at around $ 220, the average target price among analysts is only $ 98 per share.

However, that target number has been climbing higher in recent times. This month, Needham more than doubled its price target to $ 193 per share, and Morgan stanley (NYSE: MS) gave a more modest boost of $ 20 to raise his goal to $ 100. If Appian can continue to perform well, then it might just keep its stock price where it is – and let analysts keep raising their targets accordingly.

Make your own calls

Wall Street has professionals who look at business finances all day, but they are not foolproof. Among those stocks, MicroStrategy’s link to bitcoin will give its stock as much volatility as the cryptocurrency itself, while the arguments that SunPower has come a long way rather quickly are compelling. Appian, however, could be in the early stages of a much larger secular trend that could carry it much higher in the long run.

If you like what you see in these companies, don’t let the worries of Wall Street analysts stop you. Do your own research and draw your own conclusions, then invest accordingly.