3 cheap stocks Wall Street analysts think can rise at least 48%

Wall Street price targets are not a sure guarantee that a stock will reach a certain level. Things can change and so can target prices. They also usually only look at where a stock could go in the next 12 months; they are by no means long-term indicators of where a stock might end up in the long-term.

But price targets can be useful in spotting stocks that may have great upside potential. Three stocks that have a lot of upside (according to analysts) and are trading at low valuations today are Baidu (NASDAQ: BIDU), United Airlines (NASDAQ: UAL)and Enbridge (NYSE: ENB). Here’s why these stocks could be good buys right now.

Baidu: 80% up

Chinese tech stock Baidu has underperformed over the years. It’s down more than 20% in five years, and investors still aren’t so bullish. Not only are there concerns about the Chinese government’s involvement in business, but now there are concerns that the nation’s economy could slow down.

But Baidu is a stock that might be worth taking a chance on. It has a diverse business that includes cloud computing, search and a popular chatbot, Ernie, which reached 200 million users earlier this year. It’s an intriguing artificial intelligence (AI) stock, provided you’re willing to take some risk.

Business has not been booming for Baidu. Sales in the first three months of the year rose just 1 percent to $4.4 billion compared to the same period last year. On the positive side, however, operating income increased by 10%. And with some promising opportunities ahead, particularly in AI, investors shouldn’t discount Baidu given its strong presence in a massive Chinese market.

Analysts believe that the share can reach 146 dollars, which implies an advantage of at least 80% compared to where it is traded at the moment. It also trades on a rather modest forward price-earnings (P/E) multiple of just eight. While there is some risk here, investors could be adequately compensated with an appreciating stock given the low valuation at which the stock is currently trading.

United Airlines: Up 91%

Although the travel industry appears to have rebounded from the shutdowns caused by the pandemic, many airline stocks are struggling to win over investors. United Airlines shares, for example, have fallen more than 55% in five years. Analysts believe the stock should trade significantly higher above $72, which would imply a roughly 91% upside for the stock.

United is coming off a strong second quarter, in which operating income for the period ended June 30 rose nearly 6 percent to just under $15 billion. And net income of $1.3 billion was up 23% from the prior-year period. Worries about a slowing economy and a possible recession are weighing on investors and are likely keeping stocks from rising higher than they should be these days.

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At a P/E of only four, this is another example of investors who can be well compensated for taking on some risk. United might struggle during an economic downturn, but it’s still a top airline that should do well as the economy improves. Buying the stock and hanging on to it could result in some strong long-term returns.

Enbridge: Up 48%

Pipeline company Enbridge has been the best-performing stock on this list and is the only one in positive territory over the past five years, up 12% over that time. Analysts believe there could be more upside for the oil and gas stock, projecting that its shares could rise above $55. And if that turns out to be true, you could make a profit of nearly 50% if you buy the stock today.

A great reason to own the stock is the growing dividend. Enbridge has increased its payout for 29 consecutive years and is already a fantastic income stock with a yield of about 7%, which is more than five times the S&P 500 average of 1.3%.

The Canadian company has been able to increase its dividend while also expanding its operations. Last year, it announced that it was acquiring several companies from Dominion Energy in an effort to grow its presence in the U.S. market, calling it a once-in-a-generation opportunity to secure quality assets that would pave the way for it to become “the largest natural gas utility franchise ” from North America.

Enbridge’s financials could get much stronger, and they’re already solid right now. The company’s distributable cash flow for the period ended June 30 rose 3 percent to C$2.9 billion ($2.1 billion). Distributable cash flow is how the company determines how much room it has for dividend payments, and with that continuing to rise, that suggests the current payout is fine and more increases could be coming.

Enbridge shares, trading at 18 times their forward price, have rallied of late but are still a good value for long-term investors.

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David Jagielski has no position in any of the listed stocks. The Motley Fool has positions in and recommends Baidu and Enbridge. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.

3 cheap stocks Wall Street analysts think can rise at least 48% was originally published by The Motley Fool