November 5, 2022

More now than ever, investors would rather spend $80 for a share’s worth of a decidedly successful business than buy $180 worth of stock in a scandalous company with a poor balance sheet. A cheap stock purchase can allow one to be conservative with their investment while enjoying the potential it has—for example, if we’re talking about a stock that’s undervalued and is also expected to grow, then you combine those two with the eventual market recovery and shareholders could see big profits.

The trading method referred to as “buying the dip” should be used with caution since there isn’t quite a science to it. If you play your cards well, you can get a sizable discount on equities with the right business fundamentals and promising futures. The fact is that many outstanding businesses may see short-term drops, but they tend to outperform over the long run. I’ve looked through many stocks that would be considered “cheap.” Don’t panic; they’ll likely be worth a lot more in the future. That’s the point.

Join me while I break down three “cheap” stocks. These are stocks with solid fundamentals and are likely to rebound soon. The consensus among experts tells us the same as the buy ratings do. Now, let’s have a look at these time-appropriate tickers:

Builders FirstSource Inc (BLDR)

Builders FirstSource, Inc. (BLDR) manufactures and distributes building materials, manufactured components, and construction services in the U.S. to professional homebuilders, subcontractors, and consumers. BLDR provides lumber and sheet goods, including dimensional lumber, plywood, and strand board materials used in on-site home building; roofing, gypsum, and insulation products; siding, metal, and wood siding products. Other building materials and services offered by BLDR include cabinets and hardware, turnkey framing, and expert installation. BLDR, formerly BSL Holdings, Inc., was formed in 1998 and is headquartered in Dallas, Texas.

BLDR shares have grown 204% over the past five years, yet it is currently down by 34.03%, an appropriate display of how it’s sitting below fair value. Drops of 30% or more have offered excellent entry chances during the past ten years. Since 2016, BLDR has grown its EPS and sales annually, with 3-year average annual growth rates of 94.9% and 44.9%, respectively. Over the next five years, analysts predict an estimated yearly EPS growth of 18.8% for BLDR. BLDR performs remarkably against quarterly earnings projections; In Q1 ‘22, BLDR surpassed analysts’ forecasts on EPS by 105.70% and revenue by 24.71%; Q2 ‘22: 93.07% and 21.17%, respectively. BLDR shows healthy year-over-year growth across the board. BLDR has a median price target of 86.50, with a high of 125.00 and a low of 75.00, as recorded by the analysts that offer yearly price projections. Taking everything into account, BLDR’s badass buy rating is starting to feel relatable.

Asbury Automotive Group Inc (ABG)

Asbury Automobile Group, Inc. (ABG) and its subsidiaries are automotive retailers (collectively) in the U.S. ABG specializes in automotive services and products, such as new and used automobiles, as well as vehicle repair and maintenance and accident repair services. ABG offers financial and insurance products, such as third-party car financing, contracts, a debt cancellation service, and life and disability insurance. As of the end of 2021, the firm owned and operated 205 new car franchises representing 31 automobile manufacturers at 155 dealership sites in the U.S., along with 35 repair facilities. Asbury Automotive Group, Inc. was established in 1996 and is based in Duluth, Georgia.

ABG’s stock dropped by over 70% in the early 2020 market crisis; pullbacks (dips during an upward trend) of more than 25% have traditionally provided an excellent long-term opportunity to buy the dip. Well, ABG has been performing much better than it was a little more than two years ago. Analysts anticipate 18.5% annual EPS growth over the next five years. Being a positive outlook, perhaps they’re used to having their quarterly EPS projections surprised by ABG. I usually don’t bring these in as critical stats, but I’m evolving. Given the excitement, I’ll let it out bluntly just for now. ABG is a $3.3 billion market-cap firm with a trailing P/E ratio of 4.8 with a forward of 4.9. I don’t often refer to them, but these numbers are intriguing when I look at the price. For the present quarter, ABG has a stunning EPS forecast of $8.34 per share. From the analysts who provide 12-month pricing estimates, ABG has a consensus median price target of 225.00, with a high of 368.00 and a low of 135.00. This is a 44.38% increase from current pricing, and ABG’s buy rating is also part of the analyst consensus.

Entegris Inc (ENTG)

Entegris, Inc. (ENTG) manufactures equipment and systems that clean, preserve, and transport crucial elements to create semiconductors and related devices. In the U.S., Canada, Taiwan, Ireland, Singapore, Malaysia, China, Isreal, France, Germany, Korea, and Japan, ENTG employs around 5,800 people in manufacturing and research facilities. ENTG aims to assist manufacturers in production by enhancing pollutant control in various vital processes, including photolithography, bulk chemical processing, wafer handling, and shipping. The semiconductor sector currently uses around 80% of ENTG’s goods. ENTG was founded in 1966 and is headquartered in Massachusetts.

ENTG has a history of success, but the stock has been down by over 50% year-to-date. Keep in mind, however, that this is after having increased by 212% during the previous five years. Since this current drop is a substantial decline for ENTG, long-term value investors may find this to be an excellent time to consider throwing a few chips in. Recent EPS growth, revenue growth, and net income growth for ENTG have all been increasing at rates close to 17% annually. Here’s a fun little piece of data I found while looking into ENTG’s financials: The last recording of year-over-year growth shows a “Net Change in Cash” growth of 1,720.82%. ENTG currently has a dividend yield of 0.63%, with a quarterly payout to shareholders of 10 cents per share (A tiny bit cheap, perhaps, but so is the stock). According to analysts who provide annual consensus pricing estimates, ENTG has a median price target of 100.00, with a high of 145.00 and a low of 80.00. This estimate shows a 57.78% increase from current pricing, giving us just one more reason to warm up to ENTG’s buy rating.

Two Stocks to Buy and One to Sell Next Week

November 4, 2022

Stocks ticked higher to close the week, but it was not enough to make up for earlier losses as the market processed another aggressive Fed rate hike. The major averages notched 1% gains on Friday but finished lower for the week. The Dow broke a four-week winning streak with a loss of 2.5%, while the S&P and the Nasdaq lost 4.5% and 6.1%, respectively.

Investors looking for hints of Fed dovishness were disappointed on Wednesday to find no indication that the Fed may be poised to pause its tightening campaign. Fed Chair Jerome Powell said that the central bank still has “some ways to go” before the current rate hike cycle is over, noting that “incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.”

Labor data released this morning further fueled concerns that the Fed will push the economy into a recession with its aggressive stance in the battle against inflation. This morning’s payrolls release showed 261,000 jobs were added in October, surpassing the expectations of 205,000 additions.

After another rough week, here are two recommendations of stocks to buy and one stock to stay away from.

37 U.S. states and four U.S. territories have laws that permit the use of marijuana. While it is still illegal on a Federal level, President Biden’s proclamation on October 7th included a request for the attorney general “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” Many see this as a major step in the right direction, but it’s expected to be a slow road.

The potential legalization of cannabis is likely to be a significant positive catalyst for the leader in net cannabis revenue, Tilray (TLRY). The company has a presence in all key markets, with a focus on recreational and medicinal cannabis; the addressable market is significant and expanding.

Following the recent Whitehouse announcement, TLRY surged 22% but gave back some gains when the company reported Q1 2023 revenue and EPS misses. The company has its sights set on Revenue of $4 billion by 2024, a realistic target if regulatory hurdles wane. At $3.17 per share, TLRY currently trades at -8.5x forward earnings. The stock remains deeply oversold and is worth buying even after the recent uptick.

Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for more than a century. The drug firm focuses on endocrinology, oncology, neuroscience, and immunology. Key products include Trulicity, Jardiance, Humalog, and Humulin for diabetes; and Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.

The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements, which means plenty of upcoming potential opportunities for investors to benefit from. In the first half of 2022, Lilly received word that the FDA was fast-tracking its investigation of tirzepatide. A drug designed to treat adults who are overweight with weight-related comorbidities such as diabetes. Eli Lilly expects its rolling application to be completed by April 2023.

JPMorgan analyst Chris Schott recently summed up his bullish outlook on LLY. The analyst believes that Eli Lilly remains the best-positioned growth story in his coverage and one of his top picks following the stock’s pullback over the past month. The analyst sees a “significant opportunity” for Tirzepadite in type 2 diabetes and obesity, which in his view, “warrants increased attention.” Schott currently gives the stock an Overweight rating and a $300 price target.

Lilly’s share price is up nearly 20% this year and seems likely to continue to gain steam into the new year. The stock sports a dividend of $0.98 or 1.21% annually. LLY’s dividend payout for the year is set for the low 40% range, which should allow for robust future dividend growth.

A strong pipeline and a stable dividend make Eli Lilly an attractive consideration. The pros on Wall Street also think so. Among 17 polled analysts, 14 say to Buy LLY, 2 call it a Hold, and only 1 rates the stock a Sell. A median 12-month price target of $351 represents a 9% increase from its current price.

Rising interest rates and a cooling off of the red-hot housing market create a challenging backdrop for mortgage provider Rocket Companies (RKT). The average rate on a 30-year fixed-rate mortgage surged to nearly 7% last week, its highest level in over 20 years, according to Freddie Mac. Mortgage rates have more than doubled since the start of the year when the average 30-year mortgage stood at 3.11%. Furthermore, the Mortgage Bankers Association recently reported that mortgage application volume is down 37% year-over-year. This situation won’t likely resolve anytime soon as the Federal Reserve isn’t signaling a near-term slowdown in monetary policy tightening.

Rocket has struggled to meet expectations for the past few quarters as it laps 2021’s blockbuster numbers. Most recently, the company came out with adjusted quarterly earnings of -$0.03 per share, missing the consensus estimate of $0.02 per share. This compares to earnings of $0.46 per share a year ago. Revenue was reported as $1.44B, down nearly 48% from the same period last year and 26% lower than the consensus estimate.

Rocket’s been underperforming the broader market so far in 2022. RKT shares have lost about 55% since the beginning of the year versus the S&P 500’s decline of 20%. The pros on Wall Street say to Hold RKT. Of 16 analysts offering recommendations, 2 rate the stock a Buy, 12 rate it a Hold, and 2 say to Sell RKT shares.

Three Stocks to Watch for the Week of October 31st

Editorial Staff

October 30, 2022

Stocks surged into the close on Friday on the heels of positive consumer spending figures and mixed corporate earnings results. Personal spending increased 0.6%, exceeding Wall Street’s expectations for a 0.4% rise. The major indices finished the week with solid gains. The Dow stacked on nearly 6% for its fourth consecutive positive week, while the S&P 500 and the Nasdaq rose for the second week in a row with 4% and 2% gains, respectively.

This week will be eventful on the earnings front, with reports expected from several prominent companies, including Pfizer, Moderna, Toyota, Qualcomm, PayPal, Starbucks, and Kellogg’s, among others. Investors will remain focused on economic growth with Fed policymakers set to gather for the two-day November Federal Open Market Committee (FOMC) meeting, which begins on Tuesday, and a critical interest rate decision expected on Wednesday.

The Federal Reserve is expected to lift its benchmark interest rate by seventy-five basis points, marking the fourth time in a row it’s approved such a steep increase. The Fed’s latest such hike in September pushed the rate to a range of 3.00% to 3.25%—a level last seen in 2008. The labor market will also be in the spotlight, as several key reports will be released, including the Bureau of Labor Statistics October nonfarm payrolls report.

Amid unrelenting inflation and a strong potential for a recession, volatility is widely expected to continue as we head into the new year, making the job of selecting stocks difficult. A logical move in times like these is dividend stocks, which pay you just to hold them. Dividend-paying companies regularly reward investors directly with a portion of the cash flow. The most desirable dividend stocks have a history of raising their payouts over time as the company’s profits grow. Our first recommendation for the week is a high-yielding stocks that seem ripe for the picking as we head into the new year.

Anyone who has kept tabs on the global supply chain and shipping saga that’s been unfolding since the outbreak of covid is probably familiar with Genco Shipping (GNK). The company owns a fleet of 44 ships it leases for dry bulk transportation of goods like grain, coal, and iron ore. The going rate to rent one of Genco’s ships is no less than $27,000 per day, which provides some solid cash flow that the company uses to reward its shareholders.

Dry bulk shipping rates, along with GNK’s share price, have fallen in recent months. Still, as China recovers from recent lockdowns and seasonal demand is expected to be strong, it’s hard to see the pullback in share price as anything less than an opportunistic bargain.

GNK pays a handsome 14.8% dividend yield. The company will be looking to display strength ahead of its November 2nd earnings release. The company is expected to report EPS of $0.88, down 38.89% from the prior-year quarter. Meanwhile, the latest Zacks consensus estimate is calling for revenue of $91.06 million, down 22.47% from the prior-year quarter.

One area of the market that can perform well regardless of what’s happening elsewhere in markets is biotech. Biogen (BII) is a biopharmaceutical company focused on neurological and neurodegenerative disease therapies. The company is on the leading edge of creating drugs and therapeutics for some of the more perplexing chronic diseases like Alzheimer’s. Biogen has been working on drugs that can reduce the buildup of amyloid plaques which could be critical to stemming the advancement of the disease.

The neurological solutions pioneer has partnered with Eisai, a Japanese pharmaceutical company, to develop Lecanemab, one of its potential amyloid plaque-destroying drug candidates. The two companies will split the drug’s profits 50/50. Recent data from lecanemab has proven “robust” as the drug saw a 27% reduction in patients’ clinical decline on cognitive and functional metrics, causing the entire industry to rethink the historically elusive answer to Alzheimer’s.

Following the “better than expected” Phase 3 data for lecanemab, JPMorgan analyst Chris Schott raised the firm’s price target on Biogen to $275 from $221. The analyst foresees full FDA approval for lecanemab and believes there is a high probability that the Centers for Medicare and Medicaid Services will cover the drug. Schott would not be surprised to see further upside for the shares into year-end as he expects lecanemab to dominate the competition.

While lecanemab takes center stage, Biogen has a pipeline that features several drugs in various clinical stages. The company’s Spinraza for treating spinal muscular atrophy has been a blockbuster drug. Multiple sclerosis drugs Avonex and Plegridy generate nearly $2 billion in annual sales.

BIIB shares spiked on the positive lecanemab results and have dwindled since. A better entry opportunity may come, but for long-term-minded investors focusing on growth, Biogen is an intriguing candidate even at its current level.

Given the unprecedented situation with major world powers Russia and China, Washington is taking steps to strengthen the technical capabilities of its military and its allies while also seeking to protect the U.S. from cyber threats.

Booz Allen Hamilton (BAH) is one of the world’s largest cybersecurity solutions providers. Specializing in marketing cybersecurity products that other companies produce, nearly every U.S. federal, intelligence and defense agency uses its services. In other words, Booz Allen is poised to scoop up a significant portion of the whopping 15.6 billion that the U.S. is expected to spend on cybersecurity in 2023.

For its fiscal 2023 first quarter, which ended June 30, revenue surged 13% year over year to $2.25 billion, while its net income jumped an impressive 50% to $138.1 million. Wall Street expects $4.88 EPS for the entire year, indicating a reasonable forward P/E of 19.4 times.

Stifel analyst Bert Subin recently raised the firm’s price target on BAH to $105 from $102 after hosting the company at the firm’s London Industrials & Renewables Summit and coming away with a favorable outlook, driven by continued demand tailwinds and an easing labor market. The current consensus recommendation is to Buy Booz Allen. A median price target of $105 represents an increase of 10% from the current price.

Three Stocks to Avoid for the Week of October 31st

Editorial Staff

October 29, 2022

Seeking out great stocks to buy is important, but many would say it’s even more essential to know which stocks to steer clear of. A losing stock can eat away at your precious long-term returns. So, figuring out which stocks to trim or get rid of is essential for proper portfolio maintenance.

Even the best gardens need pruning and our team has spotted a few stocks that seem like prime candidates for selling or avoiding. Continue reading to find out which three stocks our team is staying away from this week.

Rising interest rates and a cooling off of the red-hot housing market creates a challenging backdrop for mortgage provider Rocket Companies (RKT). The average rate on a 30-year fixed-rate mortgage surged to nearly 7% last week, its highest level in over 20 years, according to Freddie Mac. Mortgage rates have more than doubled since the start of the year, when the average 30-year mortgage stood at 3.11%. Furthermore, the Mortgage Bankers Association recently reported that mortgage application volume is down 37% year-over-year. This situation won’t likely resolve anytime soon as the Federal Reserve isn’t signaling a near-term letup in monetary policy tightening.

Rocket has struggled to meet expectations for the past few quarters as it laps 2021’s blockbuster numbers. Most recently the company came out with quarterly adjusted earnings of -$0.03 per share, missing the consensus estimate of $0.02 per share. This compares to earnings of $0.46 per share a year ago. Revenue was reported as $1.44B, down nearly 48% from the same period last year and 26% lower than the consensus estimate.

While the future remains bright for renewable energy, not all solar stocks are a buy. Provider of solar engineering and construction services, iSun Inc. (ISUN), has seen operating losses skyrocket alongside revenue increases in recent years.

iSun reported second quarter 2022 revenue of $16.5 million representing a $12.1 million or 278% increase over the same period in 2021. Alongside top line growth over the past year, the company has reported $15.3 million in operating losses. Operating income in the second quarter was a loss of $5.6 million compared to a loss of $2.8 million over the same period in 2021. YTD operating income was a loss of $11.3 million compared to a loss of $5.4 million during the same period in 2021.

Given the company’s already high debt position after a series of acquisitions in 2021, the additional losses could force the company to raise equity inorder to de-lever its balance sheet which could mean further declines for iSun. The small, unprofitable solar company’s stock is down 72% over the past 12 months, but it’s far from a bargain considering the risk factor.

Fintech company Upstart Holdings (UPST) share price is down more than 93% from its October ATH and it may have more to go as bank partners tighten their fists. Institutional lenders are less willing to fund Upstart’s loans than ever and it makes sense for backers to be so cautious in the current macroeconomic environment. Rising interest rates will continue to add pressure to consumers leading to more defaults. Upstart is especially vulnerable as its AI models have yet to be tested during a significant down period in the credit cycle.

In Upstart’s Q2 report, management cited another reason for the lower outlook. The company more than doubled the amount in loans it funded with its own cash in just a single quarter. At the end of Q1, the company held $600 million in loans on its own balance sheet, up from $250 million in the previous quarter, severely exposing its balance sheet to credit risk at what could be the worst possible time.

In the second quarter the company saw adjusted earnings of $0.01 per share from revenue of $228 million, missing the consensus expectation of $0.10 per share by 90%. “This quarter’s results are disappointing and reflect a difficult macroeconomic environment that led to funding constraints in our marketplace. In response we’re taking the necessary actions to build a more resilient and committed funding model over time,” said Dave Girouard, co-founder and CEO of Upstart. Until sustainable momentum is realized, we’re sticking to the sidelines.

3 Once-in-a-Decade Buying Opportunities in the Bear Market

Editorial Staff

October 29, 2022

As pessimism runs high, some stocks have fallen to unsustainably low valuations.

The fast-moving stock market lends itself to high volatility. That factor may or may not work in favor of investors, though prospective buyers can find bargains if they exercise enough patience.

However, the current down cycle is the most severe since the 2008 financial crisis. That factor could mean an opportunity to buy growth tech stocks that may not return for many years. Investors looking for these once-in-a-decade buys may want to consider Alphabet (GOOGL 4.41%) (GOOG 4.30%), MercadoLibre (MELI 5.37%), and Salesforce (CRM 2.05%).

Shares of this internet giant are selling at a major discount

Jake Lerch (Alphabet): Here’s a hypothetical: If you could go back in time and buy $10,000 worth of Alphabet shares on the day of its initial public offering (IPO), would you do it? Similarly, would you invest $10,000 in Alphabet on March 13, 2020, the start of the COVID-19 pandemic, as the entire stock market was plummeting?

Of course, with the benefit of hindsight, we know those investments would have paid off. If you had bought $10,000 worth of Alphabet class C shares when they debuted in 2014, they would now be worth $34,700. A similar investment made in March 2020 would have grown to $15,800.

I bring this up because those two dates appear like the best once-in-a-decade opportunities to have bought shares of Alphabet. And, as I’ve mentioned, they were great times to buy shares. Anyone who did has made a solid profit on their investment.

However, today may seem like the wrong time to bet on Alphabet. The company just reported a lackluster quarterly report. Overall revenue growth slumped from 41% to 6%. YouTube, one of Alphabet’s biggest growth engines, saw its ad revenue decline for the first time ever on a year-over-year basis.

Yet, despite an admittedly poor report, now seems like that once-in-a-decade opportunity. Why? Valuation. On a valuation basis, Alphabet shares are historically cheap. In fact, they’re closing in on their lowest levels ever.

There are several ways to measure valuation, but I’ve included two of the most popular measures in the chart above: the price-to-earnings (P/E) ratio and the price-to-sales (P/S) ratio.

While they measure price against two different financial figures (earnings and revenue, respectively), both ratios indicate that Alphabet shares are cheap — extremely cheap. In the case of its P/E ratio, Alphabet shares are at a new all-time low of 17.89.

Obviously, economic conditions are not great right now. Inflation is high, and the stock market is mired in a bear market. But just like in March 2020, the darkest times are often the best times to buy stocks. Looking back many years from now, it might seem evident that October 2022 was the right time to load up on Alphabet. Using valuation as my guide, it sure looks like a once-in-a-decade opportunity to me.

The Latin American tech juggernaut that American investors need to watch

Will Healy (MercadoLibre): MercadoLibre is not a familiar name in the U.S. However, in Latin America, it has evolved into the Amazon of that region. Between the U.S.-Mexico border and the southern tip of Argentina, it is the most commonly visited e-commerce platform.

However, what may drive investor interest is the ecosystem that enhances its e-commerce advantage. Latin America is a cash-based society. To make digital payments possible, MercadoLibre created Mercado Pago. That has since evolved into a fintech product that consumers can now use for non-MercadoLibre purchases and loans.

Also, to address shipping and fulfillment-related challenges, the company created Mercado Envios. These and other businesses create synergies that can help the company fight off challenges from Amazon, Sea Limited‘s Shopee, and numerous other companies.

Despite an environment that has sometimes faced high inflation and political uncertainty, MercadoLibre managed to generate $4.8 billion in revenue in the first half of 2022. This surged 57% compared with the first two quarters of 2021.

Additionally, it turned profitable on an annual basis last year, a factor that should help it weather the current bear market. MercadoLibre stock has not escaped the bear market, as it has fallen more than 55% from its peak.

Nonetheless, this is where the once-in-a-decade opportunity appears. It currently trades at a P/S ratio of less than five, a level previously reached in 2008. Since that 2008 trough, the stock has risen more than 100-fold!

Admittedly, MercadoLibre stock will probably not repeat that feat. However, with its rapid revenue growth, it could still generate outsize gains as it continues dominating Latin America in e-commerce and fintech.

A more mature Salesforce can still deliver significant investment returns

Justin Pope (Salesforce): Customer relationship management company Salesforce was one of the original enterprise software stocks. Founded at the turn of the millennium, it’s survived the dot-com bust to deliver more than 3,600% total returns since late 2001. Today, Salesforce is a software conglomerate that has developed and acquired its way to having a do-it-all suite of software tools that companies can run their business.

Investors are facing one of the worst bear markets in many years, which has sunk valuations throughout Wall Street. Salesforce stock is trading at a price-to-sales ratio (P/S) of 5.4, its lowest in more than a decade:

Management also believes the stock is cheap. The company authorized its first-ever share repurchase program in August for $10 billion, enough money to retire 6% of all outstanding shares at current prices. Reducing the share count boosts per-share metrics, which means that earnings per share (EPS), Salesforce’s profits per share, will grow faster.

But the company’s revenue isn’t done growing either; management is targeting $50 billion in revenue by the end of the fiscal year 2026, an average of 17% growth annually between now and then. A growing addressable market and cross-selling across its business should drive this growth. While Salesforce’s best growth years are probably behind it, the stock should still have plenty left in the tank, which could translate to significant long-term gains for shareholders.

Three Biotech Stocks to Add to Your Watchlist Now

Editorial Staff

October 28, 2022

Some experts say we’re in “the golden age of biotechnology.” Scientific advances are opening up possibilities for treating and preventing diseases that could only have been imagined in the past.

This golden age is also presenting tremendous opportunities for investors. Biotech stocks offer the potential for substantial long-term returns. The best biotech stocks to buy right now boast robust pipelines, and some already have winning drugs on the market.

Here are a few companies that look like good options to move significantly higher in 2023.

Vertex Pharmaceuticals (VRTX) is the undisputed leader in cystic fibrosis (CF) therapies. The company’s portfolio of approved CF drugs will deliver at least an estimated $8.4 billion this year, made possible by intense market penetration and decades-long devotion to research and development in the space.

So far, the company has remained strongly profitable and has continued to expand revenue within the CF market at a steady pace. Suppose management’s plans for expanded approvals for younger cohorts continue to come to fruition over the next few years. In that case, Vertex will eventually be treating as many as 90% of all people with CF.

The company is moving its pipeline beyond CF with a handful of mid-stage clinical programs for pain relief, kidney disease, and genetic hematologic disorders like sickle cell disease. In other words, even if it eventually corners the entire CF therapy market, there will still be other opportunities for growth.

One potential catalyst is its partnership with CRISPR Therapeutics (CRSP) in developing gene-editing treatments for two rare blood disorders, which is expected to begin regulatory studies in March 2023. This means investors can look forward to a steadily increasing flow of new revenue and expanded approvals, both of which should support the stock’s price significantly.

Of 26 analysts offering recommendations for VRTX, 18 give the stocks a Buy rating, and 9 rate it a Hold. There are no Sell ratings. It seems likely that Vertex will reward patient investors as the steadily growing biopharma company seems ripe for expansion for years to come. With company earnings due out on Nov. 1, investors should watch for upgrades to the stock.

Global healthcare leader Eli Lilly And Company (LLY) has been creating high-quality medicines for over a century. The drug firm focuses on endocrinology, oncology, neuroscience, and immunology. Key products include Trulicity, Jardiance, Humalog, and Humulin for diabetes; Taltz and Olumiant for immunology; and Verzenio and Alimta for cancer.

The mega-cap pharmaceutical giant’s pipeline is locked and loaded with promising advancements, which means plenty of potential opportunities for investors to benefit. In the first half of 2022, Lilly received word that the FDA was fast-tracking its investigation of tirzepatide. A drug designed to treat adults who are overweight with weight-related comorbidities such as diabetes. Eli Lilly expects its rolling application to be completed by April 2023.

JPMorgan analyst Chris Schott recently summed up his bullish outlook on LLY. The analyst believes that Eli Lilly remains the best-positioned growth story in his coverage and one of his top picks following the stock’s pullback over the past month. The analyst sees “significant opportunity” for Tirzepadite in type 2 diabetes and obesity, which in his view, “warrants increased attention.” Schott currently gives the stock an Overweight rating and a $300 price target.

Biogen is a biopharmaceutical company focused on therapies for neurological and neurodegenerative diseases. The company is on the leading edge of creating drugs and therapeutics for some of the more perplexing chronic diseases like Alzheimer’s. Biogen has been working on drugs that can reduce the buildup of amyloid plaques which could be critical to stemming the advancement of the disease.

The neurological solutions pioneer has partnered with Eisai, a Japanese pharmaceutical company, to develop Lecanemab, one of its potential amyloid plaque-destroying drug candidates. The two companies will split the drug’s profits 50/50. Recent data from Lecanemab has proven “robust” as the drug saw a 27% reduction in patients’ clinical decline on cognitive and functional metrics, causing the entire industry to rethink the historically elusive answer to Alzheimer’s.

Following the “better than expected” Phase 3 data for Lecanemab, JPMorgan analyst Chris Schott raised the firm’s price target on Biogen to $275 from $221. The analyst foresees full FDA approval for Lecanemab and believes there is a high probability that the Centers for Medicare and Medicaid Services will cover the drug. Schott would not be surprised to see further upside for the shares into year-end as he expects Lecanemab to dominate the competition.

While Lecanemab takes center stage, Biogen has a pipeline that features several drugs in various clinical stages. The company’s Spinraza for treating spinal muscular atrophy has been a blockbuster drug. Multiple sclerosis drugs Avonex and Plegridy generate nearly $2 billion in annual sales. BIIB shares spiked on the positive Lecanemab results and have dwindled since. A better entry opportunity may come, but for long-term-minded investors focusing on growth, Biogen is an intriguing candidate even at its current level.

Three Cannabis Stocks to Buy and Hold

Editorial Staff

October 25, 2022

In 2017 and 2018, investors piled into cannabis stocks as word spread of the “next big thing.” Canada made global history when it became the second country in the world and the first G7 nation to legalize cannabis federally. Emerging players spoke of big plans, which stoked investor enthusiasm. Amid the initial excitement, legislative progress was slow, and competition in the stifled marketplace kept prices low. By April 2019, early-stage growth hiccups caused share prices to change direction, and since then, the vast majority of pot stocks have seen a 50% or more decline in value.

The cannabis industry may not have been the explosive growth opportunity that early investors had anticipated, but there is still tremendous long-term upside. 37 U.S. states and four U.S. territories have laws that permit the use of marijuana. While it is still illegal on a Federal level, President Biden’s proclamation on October 7th included a request for the attorney general “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” Many see this as a major step in the right direction, but it’s expected to be a slow road.

No one can predict when significant legislative changes will occur or how taxation will affect costs. Along with the possibility of tremendous upside opportunity, uncertainty is there. Stock selection is critical in the Marijuana space. Investors should look for competitive companies with the liquidity to sustain themselves. This list will discuss three potential winners from the space.

U.S.-based Trulieve Cannabis (TCNNF) stands out as one of the few cannabis companies that have been able to turn a steady, meaningful profit, with four years of consistent quarterly profitability under its belt. That is, up until its most recent quarter, when the company reported a net loss on the bottom line of $22.5 million, compared to the net income of $40.9 million reported for the previous year’s quarter. However, much of the loss can be attributed to one-time charges related to Trulieve’s recent acquisition of Harvest & Recreation Health. The quarterly net loss came in at around $1.1 million without the one-time charges.

While the company’s recent loss might be looked at as a step in the wrong direction, it’s common to see this following a major acquisition. Trulieve’s cannabis revenue has been following a steady upward trajectory since well before the acquisition took place. During the second quarter, revenue increased by 49% year over year to $320.3 million.

The company has been steadily expanding operations, nearly tripling in size over the past few years. Since June 2020, when it had just 52 dispensaries, all located in the state of Florida, the company operates 177 market-leading dispensaries throughout 11 states. It has successfully done so to preserve its position as a major player in this increasingly competitive market.

As long as marijuana remains illegal at the federal level, access to credit markets for pot companies will be spotty at best. Marijuana-focused real estate investment trust Innovative Industrial Properties (IIPR) buys medical marijuana cultivation and processing facilities in legalized states with cash and leases these properties back to the seller. It’s a win-win agreement that provides cash to cannabis companies while netting IIP long-term tenants.

IIPR provides investors ground floor access to exponential growth potential along with the reliability of a REIT. As of early September, Innovative Industrial Properties owned 111 properties covering 8.7 million square feet of space in 19 states. Moreover, 99% of its tenants were on time with their rent as of the end of June. Over the past five years, IIPR’s quarterly payout has grown by 1,100%. The REIT currently boasts a 7.74% yield.

President Biden spoke of three executive actions surrounding cannabis pardons and initiating a review on cannabis scheduling, potentially setting the stage for federal-level legalization of marijuana. “As I often said during my campaign for President, no one should be in jail just for using or possessing marijuana. Sending people to prison for possessing marijuana has upended too many lives and incarcerated people for conduct that many states no longer prohibit. It’s time that we right these wrongs,” said president Biden.

As a result, many of the pros on Wall Street are upping their expectations for cannabis businesses in 2023. “We could be on the cusp of a secular cannabis bull market,” said Stifel analyst Andrew Partheniou.

The potential legalization of cannabis is likely to be a significant positive catalyst for the leader in net cannabis revenue, Tilray (TLRY). The company has a presence in all key markets, with a focus on recreational and medicinal cannabis; the addressable market is significant and expanding.

Following the big White House announcement earlier this month, TLRY surged 22% but gave back some of those gains when the company reported Q1 2023 revenue and EPS misses. The company has its sights set on yearly revenue of $4 billion by 2024, a realistic target if regulatory hurdles wane. At $3.52 per share, TLRY currently trades at -8x forward earnings. The stock remains deeply oversold and is worth buying even after the recent uptick.

Three Stocks to Watch for the Week of October 24th

Editorial Staff

October 23, 2022

A solid finish to another volatile week helped boost stocks into the close on Friday after market positive comments from the Federal Reserve. The Wall Street Journal reported Friday that some Fed officials had expressed concerns about overstressing the economy with large rate hikes. These statements, combined with solid earnings reports from a slew of prominent companies, helped ease investor sentiment last week, but will it last? The jury is still out.

This week market watchers can expect quarterly results from some of the world’s largest companies, including Microsoft (MSFT) and Apple (AAPL). Investors can also expect updates on the housing market, including August home prices and new and pending home sales for September. We’ll get some clarity on the effects of sky-high inflation and an ultra-aggressive central bank on consumer sentiment. An update to the Conference Board’s Consumer Confidence Index is expected Tuesday, and the most recent reading for the University of Michigan’s Consumer Sentiment Index is expected Friday.

One of the greatest challenges associated with clean energy is the intermittency of its sources. The sun doesn’t shine all the time, and the wind doesn’t always blow. Energy storage is the solution that allows excess energy to be stored, enabling continuous power output at all times, and making clean energy as reliable and consistent as fossil fuel. Our first buy recommendation this week is a time-tested major player in the U.S. energy sector that’s focused on striving to meet the renewable energy storage needs of businesses and governments around the globe as the transition toward carbon neutrality progresses.

Since the U.S. government officially introduced the first-ever tax credit for clean energy storage projects, there have been remarkable positive business developments in the industry. General Electric (GE) is making leaps and bounds to position itself ahead of the pack when it comes to energy storage. Potential buyers may get an attractive entry with quarterly earnings on the way this week.

Dating all the way back to 1890, GE has been a significant player in the global energy market for 130 years, operating as a high-tech industrial company in Europe, China, Asia, the Americas, the Middle East, and Africa. It operates through four segments: Power, Renewable Energy, Aviation, and Healthcare segments. The company is widely known for its LEAP aircraft engines, heavy-duty gas turbines, Haliade-X and Cypress wind turbines, and healthcare solutions.

Constantly striving to enhance and innovate its line of products, GE’s latest offering from the renewable segment is its ‘Reservoir’ energy storage system for seamless integration across power grids. The Reservoir enables customers to increase Renewables integration, improve financial performance, enhance grid operations, reduce energy costs, and enable more distributed local generation. GE’s Reservoir condenses 4MWh and 10 years of energy storage experience into a 20’ box – delivers an estimated 15% improved lifecycle on the batteries, 5% higher efficiency, and reduced installation time and costs.

The company plans to triple its manufacturing capacity for solar and battery energy storage systems to 9 GW per year by the end of 2022 with the help of its Renewable Hybrids factory in South India this February. The facility, which employs 250 people, manufactures the company’s FLEXINVERTER and FLEXRESERVOIR products, the former a containerized solution for utility-scale solar and storage facilities and the latter a system-integrated battery energy storage solution.

The new factory will be used to support the growing demand for hybrid projects around the world, a company spokesperson said in an email, adding that “as a result of the growing demand, there is a need to increase capacity across all elements of the supply chain, and we are helping on that front with this facility.”

General Electric is expected to report third-quarter earnings on Tuesday, the 25th of October, before the market open. The consensus EPS forecast is $0.47. EPS for the same quarter last year was $0.57.

U.S.-based Trulieve Cannabis (TCNNF) stands out as one of the few cannabis companies that have been able to turn a steady, meaningful profit, with four years of consistent quarterly profitability under its belt. That is, until its most recent quarter, when the company reported a net loss on the bottom line of $22.5 million, compared to the net income of $40.9 million reported for the previous year’s quarter. However, much of the loss can be attributed to one-time charges related to Trulieve’s recent acquisition of Harvest & Recreation Health. The quarterly net loss came in at around $1.1 million without the one-time charges.

The company has been steadily expanding operations, nearly tripling in size over the past few years. Since June 2020, when it had just 52 dispensaries, all located in the state of Florida, the company has operated 177 market-leading dispensaries throughout 11 states. It has successfully preserved its position as a significant player in this increasingly competitive market.

Trulieve Cannabis garners a 100% Buy rating from the 18 analysts offering recommendations. A median price target of $28.71 represents a 169.62% upside. TCNNF stands as one of the best picks to profit from the cannabis opportunity. Depending on your platform, there may be additional steps and fees when trading over-the-counter (OTC) stocks.

Technology and high-growth shares have been hit the hardest in 2022. As the market assimilates the central bank’s rate-hike cycle, it could be time to start looking for gems among the beaten-down technology and high-growth shares that have been hit the hardest during the market rout.

Israel-based Nice Ltd. (NICE) is a provider of enterprise software with more than 27,000 customers (including 85% of the Fortune 100) from 150 countries. Its operating segments consist of Customer Interactions Solutions and Financial Crime & Compliance Solutions. Over the past year, the company generated $2.0 billion in revenue, approximately $1.1 billion was cloud-based revenue. Over the past three years, the company’s revenue grew 22.3% from $1.57 billion in 2019 to $1.92 billion in 2021. In terms of profits, its operating profit rose 10.6% to $263.9 million from $238.7 million a year earlier.

Building on the stellar growth, the company reiterated its ambitious targets when it unveiled its NICE3D strategic plan during its recent investor’s day event. The company outlined its updated financial goals through fiscal 2026, headlined by 30%+ operating margins and double-digit revenue growth. Nice currently trades at 6.74x sales, considerably less than its main competitor Five9 at 10.03x. The current consensus among 12 polled analysts is to Buy NICE. A median price target of $269.48 represents an increase of 40% from Friday’s closing price.

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