Are you looking for some new stock picks that will start paying off sooner than later? Finding good choices can be particularly tough in the current environment. Not only are stocks' near-term performances difficult to predict, but we're starting to see a few economic red flags like rising unemployment and a recently uninverted yield curve.
There is a small handful of stocks, however, that could be notably higher by the end of this year. In most cases, that's because their share prices have experienced exaggerated weakness recently. Nevertheless, these three look promising at their current prices.
BigBear.ai
Most everyone agrees we're now well into the commercial era of artificial intelligence (AI). Self-driving automobiles, interactive online platforms like ChatGPT, and infrastructure optimization are just some of the practical developments being driven by AI. Businesses are increasingly using artificial intelligence tools to make their employees more productive.
But how exactly does an employee glean actionable information from an employer's mountains of data? They need an interface that understands exactly what the user would like to accomplish, and a platform that can parse those tons of information and respond to the request. That's a tall order, but it's an effort well worth making. Precedence Research predicts that the enterprise AI software market is set to grow at an annualized pace of 44% through 2032.
And software that fills that order is just what BigBear.ai Holdings (BBAI -16.16%) offers.
BigBear describes its solutions as "a higher form of decision intelligence." It's a fitting description. From supply chains to security to digital-identity management, BigBear can help enterprises do things better. For example, it's now working with London's Heathrow Airport on a project to help that massive transportation hub run more cost-effectively as well as more safely. In May, BigBear teamed up with supply chain logistics consultancy Spinnaker, equipping it to help its clients in a more meaningful way. Each additional business client, of course, translates into more revenue for BigBear.
That's not to suggest that its top-line growth is steady, and the company isn't profitable either. Both conditions are normal for a relatively new and relatively small company. But they still can lead to serious volatility in a stock's price. That's a big reason BigBear.ai shares are currently down 90% from their early 2022 high.
The net selling stopped some time ago, though, and the analysts covering the stock have an average 12-month price target of $3 per share on it. That's nearly double BigBear stock's present price, setting the stage for a rally sooner than later.
Chipotle Mexican Grill
Yes, Chipotle Mexican Grill (CMG -0.12%) just lost a long-tenured CEO who oversaw some of its best growth. Brian Niccol -- who had been at the fast-casual chain's helm since 2018 -- was tapped this month to assume the CEO role at Starbucks. Still well down from their June peak, Chipotle shares were up-ended by the announcement, and are still trading near that lower level.
It's arguable, however, that the market is overreacting to the news. Most investors seem to be overlooking the fact that what makes Chipotle such a great growth stock isn't its leadership as much as it is its menu.
Don't misunderstand. Niccol deserves a great deal of credit for turning Chipotle Mexican Grill back into a quick-service champ. He took the helm at a time when the brand was still damaged in the wake of a series of incidents in which customers contracted foodborne illnesses such as norovirus at its restaurants. With or without those reputation-dinging missteps, the Tex-Mex restaurant chain just felt a little flat thereafter.
Niccol reinvigorated the company with initiatives like a rewards program, menu overhauls like the addition of carne asada, and a sweeping digitalization of the chain's operation. Sales growth reaccelerated under his leadership, and for good reason.
This isn't one of those cases like former Apple CEO Steve Jobs or former General Electric chief Jack Welch, however, where a high-profile CEO is practically synonymous with -- and inextricably linked to -- the company. Chipotle will do just fine without Niccol in charge because his handiwork will be left behind, delivering a lingering positive impact.
That doesn't necessarily mean other investors are ready to suddenly change their minds about this company's foreseeable future. Plenty of investors are still shell-shocked, and could remain so for some time. The stock could reflect this shock for a while.
It won't reflect it forever though. Better to step in now rather than hope you spot any brewing recovery in Chipotle's share price before it starts getting traction in earnest.
ASML Holding
ASML Holding's (ASML -1.80%) current share price of around $920 is more than 20% below analysts' consensus target of nearly $1,194, and the vast majority of the analysts covering the company still consider the stock a strong buy despite its recent weakness.
It's not a household name. Odds are good, however, that someone in your household regularly uses products manufactured by its equipment.
ASML builds equipment used to manufacture computer chips. There are several technologies that can be used in chip fabrication, but ASML's core technology is arguably the best of them: It's among the fastest, it's the cheapest, and most importantly, it's the best choice when it comes to making today's highest-performing chips. ASML's high-end tools use a technique called extreme ultraviolet (EUV) lithography -- light-based masking that essentially sprays a semiconductor into existence.
Its systems aren't cheap. The going rate for just one of ASML's highest-end chipmaking platforms is on the order of $370 million. Chip companies will certainly postpone buying more of this equipment at times when such big investments don't make a great deal of financial sense relative to demand. ASML is also a frequent target of intellectual property theft and unlicensed use of its patented technology.
However, Netherlands-based ASML is quite resilient in the long run. There's just too much IP packed into its systems for rivals to easily copy, and there's too big of a barrier to entry for most would-be competitors to knock it off its market-leading perch. ASML is estimated to control the vast majority of the EUV market.
There's also no getting around the fact that its regular customers like Intel and Qualcomm can't forego buying its newest and best lithography equipment when their competitors are shelling out for the most updated versions of ASML's tech.
The company is predicted to deliver revenue growth of only a little over 4% this year. However, current macroeconomic challenges aside, analysts believe its sales growth rate will accelerate to a whopping 33% next year as we enter the era of AI-capable mobile chips and the next phase of growth in artificial intelligence data centers.
