Stock Market Sell-Off: 2 Stocks That Could Double in 2 Years

There's no shortage of uncertainty in the stock market these days.

Investors have been left scratching their heads after President Trump announced global tariffs on April 2, then put the "reciprocal" tariffs with most of the world on pause for 90 days, stepped up a trade war with China, and has since flip-flopped on duties on tariffs on electronics while saying he may pull back tariffs on autos.

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As a result, the S&P 500 (SNPINDEX: ^GSPC) is now in a correction, defined as a decline of at least 10% from a recent peak. While investors may be nervous about the trade war and the increasing risk of a recession, long-term investors know that sell-offs represent buying opportunities as quality businesses just got cheaper.

On that note, let's take a look at two beaten-down stocks that could double over the next two years.

Image source: Getty Images.

1. Target

Investors can't run away from Target (NYSE: TGT) fast enough, it seems. Shares of the venerable retailer are now down 65% from their peak during the pandemic, and it's understandable why.

Target has struggled to grow since the end of the pandemic as consumer discretionary spending has been weak, its pandemic momentum faded, and it's been plagued by internal problems like theft. The company just capped off a year with flat comparable sales and earnings per share. Target also expects no growth in earnings per share this year, forecasting a range of $8.80 to $8.90 with flat comparable sales and revenue growth.

However, those headwinds now seem fully priced in as Target's price-to-earnings ratio has fallen to just 10.5. At that valuation, the stock could double with no change in earnings, and it would still trade at a discount to the S&P 500.

Target's valuation isn't going to jump on its own, but the company has a plan to reinvigorate the brand. That includes leaning further into its owned brands like Cat & Jack, its kids' apparel line, and All in Motion, its athleisure brand, which have delivered solid growth. It aims to regain its "Tarzhet" brand magic, or its cheap chic reputation that it seems to have gotten away from in recent years. The company also plans new store openings and remodels and expects to add at least $15 billion in sales over the next five years.

The company's earnings are currently well below their peak a few years ago, meaning that if Target can get back to its previous health, the stock could soar. It may need some help from the macroeconomic environment to double, but if the company shows signs of improvement, the stock has a lot of upside potential.

2. Micron

Another stock trading at a discount that has a lot of room to run right now is Micron (NASDAQ: MU), the leading maker of computer memory chips.

Micron's business is highly cyclical as prices for memory chips can change rapidly, as we saw in 2022 when smartphone sales tumbled and there was a glut in the industry.

However, Micron is now in a much stronger position than it was back then, as it's clearly benefiting from the AI boom. In its most recent quarter, its data center revenue more than doubled, pacing its overall revenue growth at 38%. Micron's biggest customer is now Nvidia, and this company has become a key partner of the AI chip leader.

Micron could be impacted by the economic headwinds stemming from the trade war, but the growth in AI should continue as the big tech companies driving that spending recognize that it's essential not to fall behind in AI.

Micron now trades at a price-to-earnings ratio of just 10 based on its expected earnings. Like Target, the malaise priced into Micron's stock seems excessive, and it shouldn't take much for the stock to move higher from here, though the macro climate is likely to weigh on the stock.

If the company can just hit current analyst expectations over the coming quarters, which call for $11.08 in adjusted EPS next fiscal year, its stock chart should go sharply upward. Given Micron's low valuation and rapid business growth, a double is certainly reachable over the next two years.

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Jeremy Bowman has positions in Micron Technology, Nvidia, and Target. The Motley Fool has positions in and recommends Nvidia and Target. The Motley Fool has a disclosure policy.