It’s hard for the little guys to get noticed sometimes, but often, it’s the little guys that are worth watching. Naturally, this applies to investing, too.
Much has been said already about the record-breaking year for the S&P 500. As we reached the final month of the decade, after such a sustained rally, it is getting harder and harder to find true bargains. The top analysts, though, know that further down the market cap ladder, unseen by the casual observer, is where some of the true gems reside, the ones from which investors stand to reap substantial rewards.
So, we took out our virtual bargain detector, opened TipRanks’ Stock Screener and looked for 3 stocks with smaller market caps poised for growth, specifically ones the analysts think are set for gains in the months ahead. Let’s take a closer look.
International Money Express (IMXI)
Remittances are making an increasingly large impact on the economies of many countries, playing a part in their economic growth, and in people’s livelihoods. Overall global remittance is expected to grow 3.7% to $715 billion in 2019. This includes $549 billion to developing nations.
One company hoping to get a slice of the growing industry is International Money Express. The Miami based company provides remittance services for select Latin American markets, with strongholds in the two biggest markets - it is the market leader in Guatemala, and the second largest provider in Mexico.
Additionally, IMXI has set its sights on new territories, both in Latin America and Africa, as well as expanding in the US and Canada. The company favors a differentiated agent acquisition strategy of handpicking agents with which the local migrant population has a cultural or linguistic affinity over increasing the number of agent locations.
Cowen’s George Mihalos thinks the game plan is working well. The 5-star analyst noted, “We believe IMXI deserves a premium valuation relative to its money remittance peers given its superior growth profile and differentiated business model [..] We see IMXI leveraging its differentiated agent strategy to further capture market share in the Latin American remittance corridor, driving sustainable low-mid teens revenue growth. With the shares trading at a discount to slower growing peers such as WU, we see an opportunity for multiple expansion near term.”
To this end, Mihalos initiated coverage on IMX stock with an Outperform rating, along with a price target of $17. This conveys the 5-star analyst’s confidence in IMXI’s ability to climb 32% higher in the next 12 months. (To watch Mihalos’ track record, click here)
Where does the rest of the Street side on this digital payments platform? It appears mostly bullish, as TipRanks analytics demonstrate IMXI as a Strong Buy. Out of 5 analysts tracked by TipRanks in the last 3 months, 4 are bullish on the stock while 1 remains sidelined. With a return potential of nearly 36%, the stock’s consensus target price stands at $17.50 (See IMXI stock analysis on TipRanks)
With a market cap of $219.6 million, Exicure is the smallest company on our list. The micro-cap biotech focuses on developing drugs for neurology, oncology, and dermatology.
Exicure’s unique selling point (USP) is its proprietary spherical nucleic acid (SNA) technology, which can better the delivery and efficiency of current nucleic acid-based therapies. The company is expected to announce its first SNA based neurology candidate before year’s end, and it has indicated it will be a rare indication for which there are few available therapies. In addition, Exicure also recently announced an agreement with Allergan to develop treatments for hair disorders, also based on Exicure’s SNA technology.
The pioneering biotech has excited Guggenheim’s Yatin Suneja, who wrote, “We expect XCUR’s SNA platform to attract interest from biopharma companies. We believe that nucleic acid therapeutics are a growing class of products, and the highly adaptive SNA technology could potentially improve the delivery and efficiency of multiple compounds. Therefore, we expect strong interest (as highlighted by a recent collaboration with Allergan) from various biopharma players in partnering with XCUR to leverage this technology.”
As a result, Suneja thinks the stock, currently at $2.89, will soon be worth $9.00 a share, and recommends buying it. We are talking about over 200% upside here. (To watch Suneja’s track record, click here)
Suneja’s bullish call resonates with the Street. Although only 3 analysts have weighed in with a view on Exicure over the last 3 months, all have rated the biotech pioneer as a Buy, making the Street consensus a Strong Buy. The average target stands at $7.33, below Suneja’s target, but still providing ample upside of 154%. (See Exicure stock analysis on TipRanks)
The advent of the smartphone has changed the way we interact with the world in every possible way, from shopping, to how we get around, to how we consume culture, amongst many other novelties. One industry going through a smart technological transformation right now is the health industry, with the rise of the telehealth space disrupting traditional doctor-patient conventions.
RBC’s Sean Dodge thinks Teledoc is ‘virtually unstoppable,’ noting, “Virtual health is going mainstream. Awareness and comfort with the technology is reaching a tipping point and the breadth of potential use-cases is expanding rapidly. There are more examples of this surfacing across healthcare every day. We are also seeing increasing evidence Virtual First benefit design is beginning to take hold, which adds even more momentum to our outlook. While the rising tide will lift all boats, we believe Teladoc is the best positioned to capitalize on this. It's superior consumer engagement platform, breadth of offerings/clinical capabilities and global reach are all important and durable competitive differentiators. The combination of new member adds, cross-selling and ramping utilization should continue to drive 25%+ organic revenue growth for the next 3+ years..”
On the back of the glowing assessment, Dodge initiated coverage on Teladoc stock, with an Outperform rating. The analyst suggests that if everything goes as planned, TDOC will be a $100 stock in the next 12 months, implying nearly 28% return. (To watch Dodge’s track record, click here)
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