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All Contents © 2019The Kiplinger Washington Editors
By Harriet Lefton, Contributing Writer
| April 10, 2019
Welcome back, bulls.
A stellar first quarter and a strong jobs report has sent the market into full-on rally mode. The Standard & Poor’s 500-stock index has now gained nearly 15% since the start of the year. And several drivers – including the growing possibility of a trade deal with China – may give the broader stock indexes a chance at hitting all-time highs this spring.
With the 10-year bull-run back on track, we turned to TipRanks’ Analysts’ Top Stocks tool to pinpoint some of the market’s most compelling investing opportunities. This tool reveals the companies with the most bullish “Strong Buy” consensus, based on top-performing analysts’ ratings of these stock picks over the last three months.
Here are 10 of the analysts’ best “Strong Buy” stock picks in anticipation of a continued rally. We’ve ranked them by potential upside based on analyst targets – from 4% to 103%.
Data is as of April 9.
Market value: $4.1 billion
TipRanks consensus price target: $64.50 (4% upside potential)
TipRanks consensus rating: Strong Buy
Cybersecurity stock Verint Systems (VRNT, $62.04) is buzzing right now. The company delivered another robust round of quarterly financials and guidance near the end of March, leading to a big round of applause from the Street. “The Comeback Kid Delivers,” writes Wedbush analyst Daniel Ives, who boosted his price target from $58 to $63. VRNT has been pushing toward that target ever since.
Ives says Verint is at a real inflection point, with investments in advanced technologies – such as machine learning and robotics – beginning to pay off.
“VRNT is seeing strong demand for its Customer Engagement hybrid cloud portfolio,” he writes. On the cyber intelligence front, because of Verint’s strong reputation and product-based approach, “the company was able to drive strong growth and expects this trend to continue into double-digit territory throughout FY20.”
“As the visibility in VRNT increases, margins ramp, and the value proposition of its analytics framework continues to take hold, we believe the multiple will further expand,” Ives writes. For further insights on this tech stock, turn to TipRanks’ VRNT Research Report.
Market value: $210.1 billion
TipRanks consensus price target: $132.36 (13% upside potential)
Walt Disney (DIS, $116.86) is a mainstay among analyst stock picks, and Wall Street still is largely in the bull camp. The company is gearing up to launch its own Disney+ streaming service, placing it in direct competition with powerful rivals such as Netflix (NFLX) and Amazon.com’s (AMZN) Amazon Prime.
Goldman Sachs analyst Drew Borst is forecasting 7.5 million global subscribers by 2020, then a whopping 73 million by 2025. Disney has just completed the biggest entertainment merger in Hollywood with the purchase of many of 21st Century Fox’s (FOXA) film and TV assets, and once that’s done, it will own 60% of streaming provider Hulu.
“It is the dawn of a new era at Disney,” Borst says. “The $70 bn acquisition of Fox is now closed and the approaching debut of Disney+ streaming service in late (calendar 2019) marks a momentous shift in the company’s content monetization model from third-party licensing to direct-to-consumer streaming.”
Despite near-term investment headwinds, the analyst is confident that Disney+ represents a positive long-term strategy. Borst thinks the service will enable DIS to develop better direct-to-consumer relationships, with higher long-run margins and better consumption data.
The analyst initiated coverage on Disney on April 4 with a “Buy” rating and $142 price target (22% upside potential). Discover more about Disney’s investing potential in the TipRanks’ DIS Research Report.
Market value: $901.8 billion
TipRanks consensus price target: $2,125.16 (16% upside potential)
While retail stocks all round the world struggle, Amazon.com (AMZN, $1,835.84) continues to deliver impressive growth quarter after quarter thanks to the company’s multi-pronged approach. Not only is it America’s e-commerce leader, but it’s also the global leader in cloud computing with its extremely valuable Amazon Web Services (AWS) unit, and it’s diving even further into media via its Amazon Prime operations.
Five-star Oppenheimer analyst Jason Helfstein has just finished a deep dive into AWS. The results have furthered his conviction in Amazon’s investing thesis, leading him to raise his price target from $1,975 to $2,085 (potential upside of 14%).
“We think AWS is well positioned as AI leads productivity improvements, forcing faster enterprise cloud adoption,” Helfstein writes. The benefit for AWS is twofold: 1) most organizations will gain access to AI through their cloud platform, driving cloud adoption; 2) AI applications and services are high-margin recurring revenues that will tie-in enterprise providers. He estimates AWS revenue to increase from $8 billion in 2018 to $13 billion in 2021.
Interestingly, Helfstein also argues that with each new successful Amazon Web Services “vertical,” Amazon is increasingly likely to spin out AWS into a separate unit. “We view this as possible when AMZN matures its advertising and video businesses,” he writes.
The Street views Amazon as one of the best stocks to buy right now. Of the 36 analysts covering AMZN shares, 35 rate it a “Buy.” For more information on Amazon’s latest market activity, get a free AMZN Research Report from TipRanks.
Market value: $3.2 billion
TipRanks consensus price target: $15.33 (59% upside potential)
Low-cost cannabis producer Aphria (APHA, $9.67) has enjoyed a tremendous run recently, with shares exploding 70% year-to-date. That’s following a horrific 2018 in which the company was hit by a short report alleging that insiders profited from acquiring international assets at extortionate prices.
But an investigation by a special board committee subsequently held that these allegations were unfounded, and the stock has been back on an upward trajectory ever since.
The committee did note, however, that “certain of the non-independent directors of the Company had conflicting interests in the Acquisition that were not fully disclosed to the Board.” As a result, chairman Irwin Simon has now taken over the CEO role. Simon is the founder, and former CEO of multibillion-dollar company Hain Celestial Group (HAIN), bringing with him extensive experience growing and guiding large companies in consumer markets.
“If management can execute, there is the potential for a very substantial re-rating of the stock price from current levels,” top-rated Clarus analyst Noel Atkinson writes to investors. “Aphria’s list of near-term operational milestones is significant, and successful execution in a timely fashion could transform the company both in terms of financial results and investor sentiment.”
These milestones include the launch of cannabis oil soft gels and optimizing growing techniques at its Leamington, Ontario site. The company plans to expand production at Leamington to 70,000 kilograms of cannabis per year. Find out what other analysts think of this cannabis stock in TipRanks’ APHA Research Report.
Market value: $1.9 billion
TipRanks consensus price target: $63.80 (21% upside potential)
Dave & Buster’s (PLAY, $52.65) received a slew of analyst “Buy” ratings following its Street-beating fourth-quarter results on April 3. The food-and-games franchise reported positive comparable-store sales growth in its Food & Beverage business for the first time in two years, while earnings of 75 cents per share beat expectations of 64 cents by a wide margin.
“We maintain our Buy rating on Dave & Buster’s (PLAY) and raise our price target to $67, from $64, following the release of better-than-expected F4Q18 (January 2019) results,” writes Maxim Group’s Stephen Anderson.
Even following a post-earnings rally, Anderson believes the stock is trading at an “attractive valuation.” Anderson sees shares surging by more than 27% from current levels, and notes that the company has now expanded its share buyback program by $200 million, to $600 million.
“We also believe accelerated share buybacks will offer another lever for EPS growth” Anderson writes about this stock pick. According to his calculations, these additional share buybacks will add about 9 cents per share in earnings this fiscal year, and as much as 28 cents per share in fiscal 2020. You can check out more analysis of Dave & Buster’s in TipRanks’ PLAY Research Report.
Market value: $4.4 billion
TipRanks consensus price target: $52.75 (34% upside potential)
CarGurus’ (CARG, $39.35) mission is to be the most trusted and transparent auto marketplace in the world. With a database of more than 5.4 million used cars, CARG’s website assists users in comparing local listings for used and new cars, and contacting sellers. It also boasts an active network of more than 40,000 American dealers.
But what sets CarGurus apart is its focus on the consumer.
“CARG’s differentiated, consumer-centric marketplace is enabling it to quickly grow site traffic while rival platforms seem constrained in their ability to respond/follow,” writes five-star SunTrust Robinson analyst Naved Khan. Indeed, CARG’s monthly audience size is now double that of competing marketplaces, and traffic continues to grow at a healthy clip.
Meanwhile revenue from auto dealers is also ramping up. “CarGurus’ rising site traffic/connection volumes, compelling dealer ROI and slew of new product launches should help drive strong growth in AARSD (annual revenue from subscribing car dealers) over the near-to-medium term, with scope for meaningful margin improvement,” writes Khan, who has a “Buy” rating and $52 price target (32% upside) on CARG.
Adding to the bullish activity comes a recent upgrade from Goldman Sachs. Citing traffic growth and marketing efficiency, Daniel Powell upgraded CarGurus to “Buy” while ramping up his price target from $43 to $48. Find out more from TipRanks in its CARG Research Report.
Market value: $64.3 billion
TipRanks consensus price target: $240.67 (42% upside potential)
Insurance giant Cigna (CI, $169.13) has 100% Street support right now. All eight analysts that have published recommendations on Cigna during the past three months rate the stock a “Buy.”
“Remain buyers as story remains on track,” recommends five-star Oppenheimer analyst Michael Wiederhorn. Fresh from management meetings, he reiterates his “Buy” rating with a $254 price target (50% upside potential).
“We continue to have confidence in Cigna’s outlook, and believe the stock looks particularly attractive despite the noise around drug pricing and Medicare For All,” writes Wiederhorn, who says the company’s valuation of roughly 7.5 times 2021 EPS targets “highly compelling.”
Most importantly, Cigna noted that the Express Scripts integration remains on track, with strong employee retention and a stable ESRX client base. Cigna completed the massive $67 billion merger back in December, and so far management has not seen any notable health-plan losses.
“Overall, Cigna continues to project robust growth from the ESRX deal, but we believe the market is unfairly punishing the company due to some of the industry noise. As a result, we maintain our Outperform rating and would continue to be buyers,” the analyst concludes. Find out what other analysts think of Cigna in TipRanks’ CI Research Report.
Market value: $3.9 billion
TipRanks consensus price target: $60.60 (47% upside potential)
Wyndham Destinations (WYND, $41.29) – one-half of the previous Wyndham Worldwide, which split off into WYND and Wyndham Hotels & Resorts (WH) this year – is one of America’s largest hospitality companies with more than 220 timeshare resorts. Shares have already surged more than 17% year-to-date as the company continues to deliver on multiyear growth targets. And according to Wall Street’s experts, there still is significant upside potential left to run.
In addition to the 40%-plus price potential for shares, based on analysts’ estimates, Wyndham Destinations also offers a generous dividend yield of 4.5%.
This dividend is one of the reasons Deutsche Bank’s Chris Woronka likes Wyndham so much: “We continue to view WYND as a consistent free cash flow generation vehicle and a prudent capital allocator, marked by programmatic share repurchase and reliable dividend increases,” writes this top-performing analyst.
And all this comes at a very reasonable valuation. “At less than 7x forward year EV/EBITDA, we believe the stock should attract incremental interest from deep value and yield-based investors,” Woronka writes. He has a “Buy” rating on Wyndham Destinations with a $60 price target. Discover more from TipRanks in its WYND Research Report.
Market value: $8.8 billion
TipRanks consensus price target: $209.00 (69% upside potential)
Some of you may already be familiar with Sarepta Therapeutics (SRPT, $124.01). This nearly $9 billion gene-therapy company already has an FDA-approved product. Exondys 51, the first-ever FDA-approved treatment for a rare but deadly genetic disease called Duchenne muscular dystrophy (DMD), is already on the market.
With more than 20 therapies in various stages of development and research focused on RNA, gene therapy and gene editing, SRPT represents a very intriguing investing opportunity. “We think Sarepta has a clear lead in DMD gene therapy and their data has set a high bar for competition,” writes Cantor Fitzgerald analyst Alethia Young.
Specifically, on March 28, Sarpeta unveiled data from its ongoing Phase 3 study evaluating casimersen and golodirsen for DMD patients with a different genetic mutation. The data was positive, and Sarepta is now gearing up to a file a new drug application (NDA) for casimersen.
“We are very encouraged by these levels of dystrophin expression by casimersen,” writes five-star Cowen & Co. analyst Ritu Baral. “Given FDA accepted golodirsen’s NDA, we remain optimistic on the probability of acceptance and success for accelerated approval of casimersen.” She has a “Buy” rating on the stock and $213 price target (74% upside potential).
An even bigger catalyst is fast-approaching. The crucial FDA decision date for golodirsen is set for August 2019; should the FDA approve the drug application, SRPT shares could move significantly higher. For more information on Sarepta, get a free SRPT Research Report from TipRanks.
Market value: $6.4 billion
TipRanks consensus price target: $38.67 (103% upside potential)
Clinical-stage biotech stock Amarin (AMRN, $19.06) is best-known for its potentially groundbreaking fish-oil drug Vascepa.
The company just announced submission of its supplemental new drug application (sNDA) to the FDA for Vascepa to reduce the risk of cardiovascular events for statin-treated patients with cardiovascular (CV) disease. This follows the company’s presentation of the landmark REDUCE-IT trial results highlighting the relative risk reduction (RRR) benefits of Vascepa, on top of statin therapy.
While investors anticipated the FDA submission, a more unexpected bullish signal came from the American Diabetes Association (ADA). The ADA has now updated its Standards of Medical Care in Diabetes for 2019 to include recommending icosapent ethyl (i.e., Vascepa) to reduce CV risk.
“As this decision was informed by the REDUCE-IT trial and the prominent role of cardiovascular disease in diabetics patients, we see this as a real-time win for Vascepa being recognized as a possible means of helping an at risk patient population,” writes top H.C. Wainwright analyst Andrew Fein.
Fein believes the medical community is beginning to appreciate the possible impact and longer-term benefits of Vascepa in CV disease patients, and concludes “we maintain our positive outlook on program expansion and most notably the prospects for benefiting a CV patient population representative of the leading cause of death in this country and globally.”
As a result, Fein reiterated his “Buy” rating on Amarin on April 1 with a $51 price target (167% upside potential). See what the rest of Wall Street has to say about Amarin in TipRanks’ AMRN Research Report.
Harriet Lefton is head of content at TipRanks, a comprehensive investing tool that tracks more than 5,000 Wall Street analysts as well as hedge funds and insiders. You can find more of their stock insights here.