3 Stocks Breaking Out with More Growth Potential Ahead
If price action is any indication of where the market stands on a stock or group of stocks, then there are a few names that have shown investors where their potential may lie in the coming quarters. By breaking out the way they have recently, chances are that more capital and attention will start to flow into them, bringing even higher returns to shareholders.
Of course, a breakout in price action is not only founded on the technical belief that a continuation buying wave will come in behind it, but it also has to have the fundamental factors to justify higher prices. This is where today’s analysis comes into play, checking in with Wall Street and other market participants to understand the recent breakout and whether it has more room to go higher.
Looking into names like Hess Co. (NYSE: HES) to represent the energy sector or Steel Dynamics Inc. (NASDAQ: STLD) in the steelmaking area of the basic materials sector, and even a growing player in the technology sector can be considered through shares of Uber Technologies Inc. (NYSE: UBER). These names will serve investors well in the coming quarters for reasons that will become clear in just a bit.
Why Analysts Boosted Hess Stock Recently
Since Hess stock has run up to 12% so far this year alone, Wall Street analysts have felt more comfortable covering this sock with a bullish shade. Those from the UBS Group decided to keep their buy rating on Hess stock as of February 2025, only this time boosting their valuations to a high of $186 per share.
This new target would call for a new 52-week high in Hess and a net upside of as much as 23% from where it trades today. Considering that the stock has already posted double-digit gains into the year and that it trades at 91% of its 52-week high today, it is clear that momentum favors this stock right now and could continue to do so.
The reasons are twofold. First, Warren Buffett has become bullish on oil, having recently acquired over 29% of Occidental Petroleum Co. (NYSE: OXY). Second, the recent shifts in the manufacturing PMI index show that more oil demand might be around the corner as domestic production capacity is called upon.
With this in mind, investors shouldn’t be surprised to see Wall Street analysts forecast up to $2.10 in earnings per share for Hess as of the third quarter of 2025, a significant boost of 20% from today’s reported EPS of $1.76. Considering that EPS growth typically drives stock prices, this is a clear justification of what could come in the future for Hess.
Short Sellers Run From Steel Dynamics Stock
Knowing that the same fundamental themes that could push oil prices and demand higher are present for Steel Dynamics, there was a clear sign that even bearish traders don’t want to risk losing more of their capital by betting against this stock.
Which is why, after a rally of up to 16.7% this year alone in Steel Dynamics stock, its short interest has contracted by as much as 18.6% this past month, a clear sign of bearish capitulation as the company starts to face improving industry dynamics and bullish momentum from the market’s price action.
This would explain why analysts at KeyCorp decided to boost their rating on Steel Dynamics stock to an overweight as of February 2025, this time keeping a valuation of $155 per share. This target not only implies that Steel Dynamics stock will flirt with its 52-week high but also calls for a net upside of as much as 17% from where it trades today.
Don’t Mess With Uber’s Growth Engine
By implementing artificial intelligence into its scalable business model, Uber has demonstrated that it can not only keep taking market share from its industry but also keep its high-margin, cash-flowing business intact as it scales quarter after quarter.
The company’s financials will show a 33.2% gross margin, which allows management to reinvest a significant portion of each sale into efficiency and growth. This explains the over 25% return on invested capital (ROIC) rate achieved in the past 12 months alone.
Recent volatility has driven markets to seek out companies with strong cash-flowing models, which might be why Uber stock has delivered up to 26.5% returns year-to-date so far, falling into the same bucket as the other two names on this list. Leaning on these factors, analysts at Evercore decided to keep their outperform rating on Uber stock as of February 2025 and boost its valuation.
Today, they see Uber stock’s fair price being closer to $115 per share, which is a new 52-week high for the stock, one that also calls for a net rally of up to 50.5% from where it trades today, giving investors both the fundamental and technical momentum they need to beat the market today.
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