Buying and holding quality stocks is one of the most efficient ways to build wealth. Three Motley Fool contributors believe now is a great time to consider buying s of Alibaba (BABA 0.
16%), Lyft (LYFT -0. 76%), and RH (RH -1. 15%) (formerly Restoration Hardware). What's more, Wall Street analysts also see attractive upsides for these stocks based on their average price targets.
Here's why these stocks are poised to soar. Image source: Getty Images.
Alibaba stock: 39% upside John Ballard (Alibaba): Alibaba is one of the leading e-commerce and cloud service companies in the world.
Intensifying competition in China's e-commerce market and regulatory uncertainty have weighed on the stock price over the past few years.
But this could also spell significant upside for investors from here as the company continues to see strong demand in its cloud.
The average analyst's 12-month price target of $162 implies a 39% upside from the current price. The stock trades at a modest forward price-to-earnings multiple of 11.
7, indicating that investors are undervaluing its expected growth. Alibaba, its U. Counterpart Amazon, is a very -centered.
Investments in artificial intelligence (AI), where Alibaba Cloud offers data intelligence services and other AI services for other companies, are driving accelerating growth in its cloud, with revenue up 18% year over year in the most recent quarter.
Alibaba also uses AI in its e-commerce to understand user behavior, make personalized duct suggestions, and manage supply chains.
This makes it a formidable competitor, despite its recently weak revenue growth. However, consumer spending is back on the rise in its Taobao and Tmall marketplaces.
Overall, Alibaba's revenue growth has accelerated sharply in recent quarters, and it's also reporting imving margins.
Analysts expect the company's earnings to grow at an annualized rate of 16% over the next several years.
Given the low earnings multiple the stock trades at today, Alibaba could not only reach Wall Street's average 12-month price target but potentially double in value within the next three to five years.
Lyft stock: 80% upside Jeremy Bowman (Lyft): Lyft may be a forgotten stock for most investors, and it's easy to see why. S of the No. 2 ridesharing company in the U.
Are down nearly 80% from where they stood at its 2019 IPO, as it entered the market overvalued and struggled during the pandemic.
However, while it plays second fiddle to Uber, Lyft has innovated with new features, recently made a smart new acquisition, and is building momentum.
According to one Wall Street analyst, the stock has an 80% upside currently: Last month, Ivan Feinseth of Tigress Financial gave it a buy rating and boosted his 12-month price target on the stock by $2 to $28.
Lyft is in a much stronger position than it was a couple of years ago as the company is both dering solid growth and has turned fitable. In the first quarter, revenue rose 14% to $1.
5 billion while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) nearly doubled from $59. 4 million to $106. It also posted a small fit of $2.
6 million on a generally accepted accounting principles (GAAP) basis.
Among the new ducts driving growth are price lock, which allows customers to lock in a price for a regular commute, Women+, which allows women riders and drivers to match with each other, and Lyft Silver, a service designed to fit the needs of seniors.
Lyft also paved the way for its expansion into Europe by acquiring Freenow, a mobility company that's active in nine countries.
Overall, Lyft looks poised to continue its double-digit percentage growth and ramp up its fitability, and the stock looks cheap at a price-to-sales ratio of around 1.
RH stock: Up to 137% upside Jennifer Saibil (RH): RH stock has been driven down by macroeconomic pressures, but the is bouncing back, and the stock should.
The company is a luxury furniture retailer that operates around 100 galleries in selected affluent communities, mostly in the U. , though it has recently been expanding into Europe.
It also has robust digital channels.
However, its bigger ambition is to grow itself into a diversified global luxury brand, and it already operates several upscale restaurants and experiences, including rentable jets and yachts.
While its target demographics are generally more resilient than the mass market, RH hasn't been immune to inflation and economic slowdowns.
But even amid sagging sales in recent years, it has continued to launch new merchandise lines and open new galleries. Its next, in Paris, is set to open shortly on the Champs-Élysées.
Meanwhile, performance at its U. Gallery has been fantastic, with sales up 47% over last year in the 2025 fiscal first quarter (which May 3) and online demand up 44%.
Two German locations that have been open for at least a year demonstrated a 60% increase in demand in fiscal Q1, and RH is experiencing accelerating demand in its locations in Brussels and Madrid.
In sum, the retailer seems to have turned a corner. It has reported year-over-year revenue increases for the past four quarters, including double-digit percentage increases for the past two quarters.
The fiscal first quarter was phenomenal, with a 12% sales increase and an adjusted operating margin of 7%. Yet RH stock is 75% off its peak.
The average target price on Wall Street is 24% higher than today's price, and one analyst expects it to jump 137% higher over the next 12 to 18 months.
Trading at the cheap valuation of 13 times forward 1-year earnings, RH stock could be a fitable pick right now for risk-tolerant investors.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has no position in any of the stocks mentioned.
Jeremy Bowman has positions in Amazon and RH. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Uber nologies.
The Motley Fool recommends Alibaba Group, Lyft, and RH. The Motley Fool has a disclosure policy.