1100 13th Street, NW, Suite 750Washington, DC 20005202.887.6400Customer Service: 800.544.0155
All Contents © 2019The Kiplinger Washington Editors
By Harriet Lefton, Contributing Writer
| May 6, 2019
The Standard & Poor’s 500-stock index ended April with its best start to a year since 1987, and most of the major stock indexes are either near or at all-time highs. That’s great for existing shareholders, but it does make it difficult to find stocks to buy now that aren’t priced for perfection.
However, a deep analysis of stocks – that means rooting through analyst activity, headline sentiment and even momentum – can turn up a few stock picks that have meaningful upside.
TipRanks’ Smart Score is a newly launched feature that pulls together eight data sets – including the factors mentioned above – to create a rating that unites all of TipRanks’ equity insights.
Here are seven “Perfect 10” stocks to buy now, according to the Smart Score system. All seven boast the highest possible score of “10,” indicating that these stocks represent compelling investing opportunities at the moment. Read on to discover these stocks and learn why they’ve earned these high scores.
Data and TipRanks Smart Scores are as of May 3, 2019. Smart Scores are adjusted daily to reflect changes in analyst sentiment, news sentiment and additional data.
Market value: $558.0 billion
TipRanks consensus price target: $218.91 (12% upside potential)
TipRanks consensus rating: Strong Buy
TipRanks Smart Score: 10
Social media giant Facebook (FB, $195.47) is flying high right now. Shares soared 11% in April following stellar earnings results, and the stock has gained almost 50% year-to-date. FB still has a long way to go before reaching its all-time high of $217.50, set in July 2018, but it certainly has made investors forget its lousy final quarter of last year.
In late April, Facebook reported first-quarter revenues that were well above Wall Street estimates, thanks in part to jewel-in-the-crown Instagram. Sales of $15.1 billion were up 30% year-over-year. Also, monthly active users (MAUs) of 2.38 billion surprised to the upside.
Facebook set aside $3 billion in anticipation of a massive penalty from the U.S. Federal Trade Commission, and even that didn’t dampen spirits. Instead, analysts rushed to reiterate their “Buy” ratings and raise their price targets.
Mark Mahaney, a TipRanks-rated five-star analyst from RBC Capital, boosted his price target from $200 to $250 (28% upside potential). He repeated his call on FB as his No. 1 internet stock, lauding its performance “during a period when FB was arguably Public Enemy #1.” He also pointed out that North America – Facebook’s largest and most mature market – sports a growth rate that “has barely changed over the last three quarters (33%, 31%, 30%). We believe that’s really sticky!”
Mahaney isn’t alone in his bullish take on Facebook’s potential. The company’s perfect Smart Score indicates a “Strong Buy” analyst consensus, as well as increased hedge fund activity, positive news sentiment and even bullish opinions from the financial blogging community. Of 37 analysts covering the stock, 33 rate the stock a “Buy.” For more information on this top-rated FAANG stock, get a free FB Research Report from TipRanks.
Market value: $12.1 billion
TipRanks consensus price target: $46.10 (24% upside potential)
If Baidu (BIDU) is China’s answer to Alphabet’s (GOOGL) Google, Yandex (YNDX, $37.24) is Russia’s response. The Moscow-based company operates the most popular search engine in Russia. But its interests extend far beyond search. Like Google’s Waymo, Yandex also is developing self-driving cars via its Yandex Taxi (ride-hailing) and Yandex Drive (car-sharing) services.
In March, Yandex announced its first collaboration with Hyundai to jointly develop control systems for Level 4 and Level 5 autonomous vehicles. “Yandex’s self-driving cars have been successfully driving on the streets of Moscow, Tel Aviv and Las Vegas, which means that the fleet can be expanded to drive anywhere,” says Yandex CEO Arkady Volozh. “It took us just two years to go from the first basic tests to a full-fledged public robotaxi service. Now, thanks to our agreement with Hyundai Mobis, we will be able to move even faster.”
The Smart Score includes strong technical readings (in short, its stock chart is giving off positive signals) as well as robust fundamentals, including a high return on equity of 29%.
Deutsche Bank analyst Lloyd Walmsley sees shares moving higher in the coming months, writing “we see scope for further gains in YNDX shares.” He has a $48 price target on shares, up from $44 previously, indicating upside potential of 29%.
“Yandex Radar data confirm strong search share trends YTD across platforms, especially on Android” writes Walmsley, adding, “we think Yandex stands out as a profitable play on ride sharing.” He sees upside potential in core search as well as Yandex Taxi and Drive. Check out TipRanks’ YNDX Research Report for more analysis of this stock.
Market value: $163.4 billion
TipRanks consensus price target: $83.50 (18% upside potential)
Citigroup (C, $70.67) is the only one of America’s “Big Four” mega-bank stocks to garner a perfect 10 Smart Score.
“Citi’s stock remains a bargain, we believe, at 103% of TBV and 7.9x our 2020 EPS forecast (which is close to consensus and not outlandish) even though returns are pushing steadily higher,” Oppenheimer analyst Chris Kotowski wrote to investors on April 15, following Citigroup’s first-quarter earnings report.
“Citi is gradually whittling down the distance between its returns and those of the rest of the industry,” writes Kotowski, a Top 100 analyst, according to TipRanks’ ratings, who sees shares spiking by 47% from current prices. “Despite this clearly visible progress, skepticism still overhangs the stock, and to us, that is why it is a good investment opportunity.” He also noted that management reiterated its 13.5% return on equity target for 2020, which “should be readily achievable” with growth, efficiency gains and buybacks.
BMO Capital analyst James Fotheringham calls C stock his “favorite” pick of the four U.S. mega-banks, citing the company’s “encouraging outlook” for more than $2 billion in net interest income growth. Following Citigroup’s earnings, Fotheringham reiterated his “Outperform” rating (equivalent of “Buy”) and nudged his price target from $92 to $93 (32% upside potential).
Citigroup has the support not just of analysts, but also financial bloggers (89% are bullish versus the sector average of 70%), and hedge funds have been increasing their buying activity on the stock. Check out more analysis in TipRanks’ C Research Report.
Market value: $8.9 billion
TipRanks consensus price target: $8.32 (6% downside potential)
Medical marijuana producer Aurora Cannabis (ACB, $8.79) is a rarity in that it’s a perfect-scoring cannabis stock. That said, ACB is different from the rest of the stocks on this list in that the average analyst price target is actually lower from current prices. That’s because shares have exploded by 77% year-to-date, putting shares well past where many analysts thought they would be right now. But Wall Street remains heavily bullish on the company’s prospects.
“As Aurora continues to ramp up supply, the company is establishing an even stronger leadership position in both capacity and profitability,” Cowen & Co. analyst Vivien Azer writes. “Even with scale opportunities ahead of them, Aurora is off to a good start, having delivered one of the highest gross margins among the leading Canadian licensed producers.”
Looking forward, Azer predicts “more meaningful growth in the second half of 2019,” for Aurora thanks to an increasing retail presence in areas such as Ontario and further afield. Most notably, Aurora was just announced as one of three winners in a tender to cultivate and distribute medical cannabis in Germany. It was awarded the maximum number of five of the 13 available lots.
Aurora’s score includes a “Strong Buy” consensus analyst rating, as well as “Very Positive” sentiment from TipRanks investors – a readout of 69,000 individual investor portfolios tracked by TipRanks on its Smart Portfolio platform. TipRanks’ ACB Research Report includes additional insights on this cannabis stock.
Market value: $11.5 billion
TipRanks consensus price target: $118.38 (16% upside potential)
The stock of video game company Take-Two Interactive (TTWO, $101.62) have actually lost 1% since the start of 2019, underperforming the market and its industry rivals. Shares dropped in February after TTWO issued downbeat guidance for the the current quarter, prompting concerns that the initial hype around Red Dead Redemption 2 was dissipating faster than expected.
But Wall Street’s analysts think TTWO is primed for a catch-up rally.
Five-star Cowen & Co. analyst Doug Creutz believes the tide is turning and has upgraded TTWO from “Hold” to “Buy.” The main reason for this shift: new video game consoles set to launch next year.
“We believe Take-Two has strong intellectual property and development talent, and we generally think it is positioned well in the AAA game market,” he writes. “With a new console cycle likely starting in 2020, we believe TTWO is the best vehicle to play the historical tailwind that has benefited group shares leading up to new console launches.”
And on April 29, Stephens analyst Jeff Cohen named Take-Two his best idea, pushing competitor Electronic Arts (EA) to second place. He also bumped up his price target from $110 to $120 (1% upside). The analyst recommends snapping up TTWO ahead of its May 13 earnings report, arguing that Red Dead’s multiplayer component Red Dead Online “has the potential to surprise to the upside once substantial content is added.”
Take-Two does have negative stock momentum right now, but its other positives overwhelmingly outweigh that factor to still give it a perfect Smart Score. But analysts, bloggers and news sentiment are all in the bullish camp, and hedge funds have been ramping up their buying. Find out what other analysts think of Take-Two in TipRanks’ TTWO Research Report.
Market value: $9.5 billion
TipRanks consensus price target: $101.92 (17% upside potential)
Customer service software stock Zendesk (ZEN, $86.95) is buzzing right now. The company recently reported solid first-quarter earnings, with healthy interest in the Zendesk Suite contributing to better-than-expected revenues of $181.5 million, up 40% year-over-year. Also impressive was a 54% growth rate in remaining performance obligation (RPO) driven by strong enterprise momentum – a powerful indicator of future revenues under contract that have yet to be recognized.
KeyBanc analyst Brent Bracelin thinks Zendesk is a “core growth holding in cloud software.” He writes: “We remain bullish on ZEN based on multiple new product growth levers across both the mid-market and further expansion into the enterprise that have the potential to accelerate the path to $1B in revenue next year.”
Bracelin, who raised his price target from $92 to $102 on April 30, recommends taking advantage of any weakness in shares to add to positions before the company’s analyst event in NYC on May 22, “when (ZEN) could showcase new product initiatives and outline additional growth metrics.”
Another recent vote of confidence for Zendesk: RBC Capital’s Ross MacMillan, currently rated No. 3 out of 5,200 analysts tracked by TipRanks, recently ramped up his price target from $90 to a Street-high $116 (33% upside potential). For more information on Zendesk, get a free ZEN Research Report from TipRanks.
Market value: $6.0 billion
TipRanks consensus price target: $33.20 (83% upside potential)
Ireland-based biopharma Amarin (AMRN, $18.14) is making a name for itself in an unconventional way. The company’s lead drug candidate Vascepa is a type of omega-3 fatty acid – an acid that’s commonly found in fish oil. The drug has already been approved by the FDA for lowering triglycerides, but now the focus has turned to a much more lucrative market: reducing cardiovascular events.
Recent results from the critical REDUCE-IT trial in September sent shares spiking by more than 400%. The company showed that, compared to a placebo, approximately one less major cardiovascular adverse event would occur on average for every six patients treated with Vascepa for five years in addition to statin therapy.
Amarin has now submitted a supplemental new drug application (sNDA) for this new indication and should receive a decision from the FDA in early 2020. An approval would effectively increase Amarin’s addressable market size by a factor of 20. Analysts are firmly optimistic about Vascepa’s outlook heading into this critical period.
“We remain bullish on AMRN shares as we expect continued script momentum for Vascepa throughout 2019 and believe the stock will react positively if its recently filed sNDA receives a priority review and no advisory committee is required,” Stifel Nicolaus analyst Derek Archila wrote on May 1.
Cantor Fitzgerald’s Louise Chen delivered a similar message on April 29: “We continue to believe that the peak sales potential for Vascepa is underappreciated and that upwards earnings revisions, to our numbers and FactSet consensus, should drive AMRN’s stock higher.” She thinks AMRN “is an interesting asset in a consolidating industry,” as larger pharmaceutical companies have expressed interest in acquiring or in-licensing drugs such as Vascepa.
Chen’s “Buy” rating includes a $35 price target, implying another 93% worth of upside from current prices. Overall, AMRN has received five back-to-back “Buy” ratings over the past three months. That, alongside encouraging sentiment from investors, bloggers and hedge funds, contributes to a 10 Smart Score for Amarin. Discover more from TipRanks in its 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.