Pinpointing stocks that can double in a year is difficult. These stocks are usually undervalued and need a significant news story to boost them. However, I've identified three stocks that have the potential to double in 2025 if everything goes right.
The three stocks are Super Micro Computer (SMCI -5.15%), PayPal (PYPL -0.03%), and MercadoLibre (MELI -1.82%). While I can't guarantee these stocks will double, all three have a significant upside.
Super Micro Computer
Super Micro Computer took investors for a massive roller coaster ride in 2024. It started the year off hot, rising more than 300% in three months, but then had a tumultuous nine months following that, as it was accused of accounting fraud. Towards the back half of the year, an independent auditor found no wrongdoing by the comapny, which puts it back on the table as a potential investment.
Supermicro (as it's often called) makes parts for servers in data centers and sells fully assembled servers. Supermicro's are the best in the business, as they offer liquid-cooled racks, which are critical in keeping energy-hungry GPUs cool. Liquid-cooled racks may cost more upfront, but they compensate for it over the long term with cooling cost savings.
There is still a huge demand for computing power, so many trends propelling Supermicro higher in 2024 still exist today. While we're still waiting on finalized quarterly earnings to be submitted to the SEC to fully clear Supermicro, those will be coming once its new accounting firm is fully up to speed.
However, the stock is dirt cheap, thanks to many investors being scared of it due to the allegations.
SMCI PE Ratio (Forward) data by YCharts
11.7 times forward earnings is a bargain, and this stock could double based on valuation alone in 2025.
PayPal
PayPal is a well-known fintech company that lost its way over the past few years. However, under the leadership of new-ish CEO Alex Chriss (who's been on the job for just over a year), PayPal has revitalized itself and is starting to gain some momentum.
Active accounts rose by 1% in Q3, which is a huge improvement from PayPal's decline over the past few years. Furthermore, its transaction margin has started to rise, indicating PayPal is becoming more profitable.
These catalysts could accelerate in 2025, leading to a PayPal that starts to see measurable growth again, as it's currently growing revenue at a fairly mundane 6% pace. However, PayPal is still a cash flow machine, and PayPal is using those streams to repurchase shares for cheap. Over the past year, PayPal has reduced its share count by 6.5%, which provides a strong boost on the earnings per share (EPS) front.
Through a combination of buybacks, investor interest, and growth reacceleration, I wouldn't be surprised if PayPal's stock rockets higher in 2025, as it trades at a cheap 18 times forward earnings. A true double will be a tall task, but if PayPal's business starts to grow materially again, a huge rise isn't out of the question.
MercadoLibre
Lastly, there is MercadoLibre, often called the Amazon (AMZN 0.01%) of Latin America. MercadoLibre has both a commerce business and a fintech wing, which produce similar revenue for the company. However, due to some losses in its credit division, the fintech wing's earnings are being negatively impacted.
These losses are temporary and can easily be remedied. However, the market has punished MercadoLibre's stock for these losses, and it currently sits nearly 20% down from its all-time highs. If MercadoLiobre can return to its previous highs and boost its profit margin while maintaining its strong growth rate, I think there could be some serious excitement about MercadoLibre's stock.
Similar to PayPal, a true double will be a tall task to achieve, but it's entirely possible if MercadoLibre posts another strong year. Reagardless, I think MercadoLibre is well-positioned to beat the market over the long term, and it looks like an attractive buy right now.
