In this article, we will look at the 8 Most Promising Stocks to Buy According to Wall Street Analysts. Let’s look at where Enovix Corporation (ENVX) stands against other promising stocks according to Wall Street analysts.

With only a few days left until the 2024 presidential election, investors are preparing for potential volatility to shake the stock market. Uncertainty surrounds the winner of the November elections, whether Vice President Kamala Harris or former President Donald Trump will take. With around 62% of US adults invested in the stock markets, there are potentially particular ways for investors to manage and position their portfolios to reach profitability based on the election outcome, as there are differences in the Democratic and Republican economic policies.

However, despite this uncertainty, geopolitical tensions are already influencing market reactions. Tiffany McGhee, CEO and CIO at Pivotal Advisors, highlighted the potential macro events that could spark market volatility at the start of October. She was of the opinion that the ongoing conflict in the Middle East and the vice presidential debate are critical factors influencing market reactions. Bond prices experienced a decline earlier in the week but stabilized with investors looking for safety amidst the worsening geopolitical tensions. McGhee expects further short-term volatility as the elections approach due to these developments.

So, what should investors do to combat this volatility and ensure their profitability? McGhee prompted investors to reassess their portfolios, especially those with a heavy concentration in equities. With the S&P 500 up 20% year-to-date and sectors like consumer discretionary and technology performing on the better end of the spectrum, she suggests that this might be the time to take some profits off the table and think about reallocating these funds into different areas of the market to follow trends.

High Growth Sectors: Where Does Expert Opinion Point?

Market volatility and geopolitical trends are pushing investors to speculate about the most promising and high-growth sectors. On October 7, Keith Buchanan, GLOBALT Investments senior portfolio manager, appeared in an interview on Yahoo Finance to talk about what his expectations from the market are. With earning expectations revised from mid-single digits to mid-double digits, solid growth is expected as 2024 draws to a close. According to Buchanan, much of this growth is expected to come from artificial intelligence. In addition, expanding earnings growth beyond traditional growth in certain other sectors, like technology, is also anticipated to drive growth.

The energy and industrial sectors have experienced greater returns in 2024, capturing a significant portion of the market. Apart from value stocks and AI plays, Buchanan also adds that names in industrials, consumer discretionary, and financials are on the path to growth ahead for 2024. However, his advice to investors is prudent: to consider geopolitical events before diving head-first into investment decisions.

The stock market is thus exhibiting signs of its changing trends. Some of these are paving a profitable path for small caps. We discussed the potential of small-caps to rally in our article 7 Penny Stocks with Low PE Ratios. Here is an excerpt from it:

Larry Adam, chief investment officer at Raymond James, recently appeared in a CNBC interview and is of the opinion that the current market is precisely what a soft landing looks like. Talking about how lower interest rates are expected to benefit small caps, particularly the Russell 2000, Adam said that he believes the bull market will continue with the economy inching closer to a soft landing.

Small cap stocks get around 56% of their financing from the short end of the yield curve, which refers to the short-term interest rate on the yield curve. This typically represents the yields on bonds with shorter maturities, such as 2-year or 5-year Treasury notes. Large-cap companies, in contrast, get only 26% of their financing from these short ends of the curve. Therefore, Adam concludes that as the Fed continues to lower interest rates, small-cap companies will be better positioned to meet their financing needs.

He pointed out that the Fed is expected to cut rates twice in 2024 and another four times in 2025, painting a favorable picture for small caps. He iterated that the impact of the rate cuts has been positive for small caps, which have outperformed large caps. Taking this into a historical context, whenever the economy goes towards a soft landing, the circumstances help the small caps more significantly than the rest of the market.

Our Methodology

We used the Finviz screener to make a list of 25 mid cap stocks with a market cap of over $2 billion and selected the 30% above price column in the target price section. We picked the top 8 stocks with the highest analyst upside potential as of October 9, 2024. We have also added the hedge fund sentiment around the stocks, as of Q2 2024.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Enovix Corporation (NASDAQ:ENVX)

Analyst Upside Potential: 69.28%

Number of Hedge Funds: 22

Enovix Corporation (NASDAQ:ENVX) is an advanced silicon battery company that designs, develops, manufactures, and commercializes lithium-ion (Li-ion) battery cells that significantly increase the storage capacity and amount of energy density relative to conventional battery cells. Its disruptive architecture allows high energy density and capacity in the batteries without compromising safety. In addition to designing its battery, the company also develops the advanced manufacturing processes necessary to produce its batteries. It also sells electrode coating, lithium-ion batteries, aging, cell packaging, and testing. It has two factories in Korea.

The company is running on strong fundamentals and delivered Q2 revenue of $3.8 million, which was above the midpoint of its forecast. The company expects higher revenue growth in the year’s second half compared to the first half. Its cash and equivalents reached $250 million. Its strong balance sheet provides it with strong liquidity.

Enovix Corporation (NASDAQ:ENVX) has had significant commercial successes recently. In June, it announced an agreement with a leading California-based technology company in the XR market and another collaboration with a Fortune 200 company. That marks its second deal with an auto OEM. The company has also moved into operational mode in Malaysia, building batteries on the agility line and ramping down its high-cost manufacturing operation in the US. It has also completed the first batch of EX-1M samples, which it sent to some of its customers.

Although the process took a little longer than anticipated, the company is making sure that all its equipment meets its rigorous specifications. It boasts an agility line that has cleared the SAT, or the Site Acceptance Test, and is producing fast runs of its EX-1M batteries.

Its customer engagement activity is continuing to strengthen. Enovix Corporation (NASDAQ:ENVX) is working closely with the top five OEMs it identified previously to achieve the key milestones in its development agreement.

Massif Capital Real Assets Strategy stated the following regarding Enovix Corporation (NASDAQ:ENVX) in its Q2 2024 investor letter:

“Enovix Corporation (NASDAQ:ENVX): Enovix is perhaps a bit of an outlier in our portfolio given that it is a battery manufacturer selling into consumer goods markets, but it fits nicely in what we believe to be the Massif Capital analytical sweet spot, businesses where science/technology, geopolitics/geoeconomics and energy/materials overlap. While some would argue that Enovix is inappropriate for a liquid real asset portfolio, the traditional definition of real asset businesses is dated.

Traditionally, real asset businesses are those that own and operate real estate, infrastructure, and natural resource assets. While this definition is workable, and most of the companies we invest in fall into one of these categories, it does not consider the ever-growing role of applied physical sciences in specific manufacturing fields, nor does it take into account the growing importance of material sciences and the changing nature of energy in general. Enovix is a material sciences business aiming to transform an ever-growing list of unique, highly refined materials into energy storage devices. They create value by understanding materials’ physical and electrochemical properties better than others…” (Click here to read the full text)

Overall, ENVX ranks 7th among the 8 most promising stocks to buy according to Wall Street analysts. While we acknowledge the potential of ENVX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ENVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.