There are thousands of publicly traded companies listed on the Nasdaq and NYSE. It's pretty difficult to keep track of them all, or to be aware of every possible opportunity. That's as true for individual investors as it is for analysts on Wall Street.
That's why we reached out to three contributors at The Motley Fool and asked them which stocks Wall Street seems to be overlooking. Here's why they singled out Personalis (NASDAQ: PSNL), ShockWave Medical (NASDAQ: SWAV), and TJX Companies (NYSE: TJX).
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Mining your genetic and molecular data
Maxx Chatsko (Personalis): You're a walking gold mine of molecular data, but accessing and interpreting the information isn't so easy. That problem has given rise to a slew of start-ups and maturing companies developing gene testing and liquid biopsy tools, which could detect diseases earlier than current diagnostics, match patients with the most effective therapies, and inform drug discovery and development efforts.
One of the latest to hit the stock market is Personalis, which held an initial public offering (IPO) in June. The company is developing the NeXT platform with the aim of providing a comprehensive view of tumors and the immune system's response to them. Whereas many cancer diagnostics and liquid biopsy panels scan tissue and blood samples for 50 to 500 genes, the company sequences all 20,000 genes in the human genome.
It's a daunting task, but the business is thriving by focusing initially on serving biopharmaceutical companies running clinical trials. The NeXT platform can provide more valuable data on the efficacy of biologic drugs in actual clinical trials, marking a significant step-up from the current status quo relying on results from tissue culture or animal studies that don't always transfer to humans. Personalis counts over 45 biopharma companies as customers and believes the clinical market represents an opportunity of over $5 billion for its platform. Successfully scaling within that niche could power the development of broader products, such as a liquid biopsy test penciled for launch in 2020.
The business is off to a promising start. First-quarter 2019 revenue totaled $14 million, representing year-over-year growth of 238%, while operating loss held steady at about $5.4 million. Wall Street is either not impressed or too distracted by other shiny objects in the space, such as peers Guardant Health (market cap of $7.5 billion) and Adaptive Biotechnologies (market cap of $4.8 billion) that are focused on much bigger markets. By comparison, Personalis sports a market cap of just $700 million. It might be taking a different approach with a markedly lower potential market initially, but investors appear to be undervaluing the long-term growth opportunity.
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Growth potential galore
Brian Feroldi (ShockWave Medical): The IPO market has been red-hot in 2019, so it's understandable why a small-cap medical device maker named ShockWave Medical hasn't received a lot of attention. That's too bad, because there are a lot of reasons to be excited about where this company is heading.
Millions of people around the world develop fatty deposits in their arteries. Over time, those deposits can become calcified and severely restrict blood flood. Doctors have combated this problem with balloons and stents for decades, but in many cases the calcium is far too hardened for the balloons to work. ShockWave created an innovative medical device that breaks up calcium deposits in much safer and more effective manner than ever before. Its balloon produces miniaturized sonic waves that break apart the calcium from the inside while leaving soft tissue in the surrounding area intact.
This might sound like a magical technology, but sonic waves have been used to treat kidney stones for decades (the technical term for this therapy is lithotripsy). ShockWave's big innovation was to miniaturize the technology so that it could fit inside the artery and to make it very simple for doctors to use. The device is catching on in the medical community and the company's revenue is growing extremely rapidly. ShockWave estimates that its total addressable market opportunity is several billion dollars in annual revenue, so the growth runway ahead could be huge.
Overall, there's a lot to like about ShockWave right now, but shares are also very pricey. Still, I think this is a great stock for growth investors to get to know.
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Quietly racking up retailing wins
Demitri Kalogeropoulos (TJX Companies): Off-price retail specialist TJX Companies doesn't get the respect it deserves from Wall Street. Sure, its shares have outperformed traditional retailing chains like Walmart and Target over the past five years. But its business is doing better than even the near-doubling of its stock implies.
TJX just kicked off fiscal 2019 in strong fashion, with growth exceeding management's forecast for the fourth straight quarter. Comparable-store sales rose 5% to mark just a slight slowdown from the holiday quarter's 6% spike. That success is no surprise to long-term shareholders, who have seen the retailer boost comps in each of the last 23 years. TJX's finances are just as attractive, with pre-tax income consistently landing at around 11% of sales.
The company sees room for a significantly larger store base than the 2,400 locations it maintained at the end of 2018. And thanks to recently boosting its dividend by 18%, TJX is just two dividend increases away from qualifying as a Dividend Aristocrat. Investors can get ahead of that official confirmation of its retailing strength and consider buying the stock right now.
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Brian Feroldi has no position in any of the stocks mentioned. Demitrios Kalogeropoulos has no position in any of the stocks mentioned. Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GH. The Motley Fool recommends ShockWave Medical and The TJX Companies. The Motley Fool has a disclosure policy.