The stock market is rallying to record levels right now. In fact the S&P 500 has now enjoyed its best start to the year in 32 years. That's quite an achievement. But for investors, it can mean that it's becoming increasingly challenging to find stocks that are still trading at attractive levels.
Here we used the TipRanks Stock Screener to find stellar stocks that still offer plenty of upside potential ahead. That's by filtering for stocks that fit the following criteria: a 'Strong Buy' analyst consensus, upside potential of over 10% based on the average analyst price target, and a very high Smart Score. If you haven't seen it already, the Smart Score pulls together 8 data sets to create a powerful rating that unites all of TipRanks' unique stock insights. Let's see how this applies with these four top stock picks below:
1. Valero Energy Corp
Texas-based Valero Energy (VLO – Research Report) is the largest independent refiner in the world, with 14 refineries and total crude throughput capacity of nearly 2.4 million barrels per day. And as the Smart Score shows, VLO scores highly on multiple datapoints. These include a bullish outlook from analysts, bloggers and hedge funds, as well as positive news sentiment. That gives VLO the highest-possible Smart Score of '10'.
Most notably, the company has 100% Street support right now, with RBC Capital’s Brad Heffern reiterating his buy rating on April 25. “1Q19 EPS of $0.34 was a strong result given the worst macro environment in several years, and was made more impressive by the fact that VLO is a merchant refiner” cheers the analyst.
Indeed, the 1Q19 refining macro environment was one of the roughest in memory, with VLO's blended indicator at its second-lowest level going back to 2012. “We are happy to move on from this quarter, as the macro has improved significantly… but it is reassuring to see VLO can still put up positive earnings in a very weak environment” writes Heffern.
And even though Valero disappointed with only $36 million of share buybacks in the quarter, it should now to return to its traditionally strong capital return program. RNC, for example, is estimating that the company will return $330 million to shareholders in 2Q19.
2. The Medicines Co
The Medicines Company (MDCO – Research Report) is an evolving biopharma that focuses on cardiovascular, infectious and intensive care medicine. Like Valero, MDCO is riding high when it comes to both the Smart Score and analyst ratings.
However what stands out about The Medicines Company is the sheer extent of the upside potential predicted by the Street. With shares currently trading at $32, the average analyst price target of $60 suggests upside of close to 88%.
And in fact, one of the most bullish analysts is Chardan Capital’s Gbola Amusa. His new $90 price target works out at 181% upside potential from current price levels. Plus Amusa highlights MDCO as a Chardan Top Pick for 2019. The best part: as we can see here, Amusa is a top-rated analyst for his savvy stock picking skills.
According to Amusa, investors should keep an eye on the late-stage development of MDCO’s twice-a-year cholesterol-lowering injection inclisiran. Ahead of 3Q19 pivotal readouts, MDCO will present interim phase II data on 18 May and on 27 May.
“Given cost-efficient execution by MDCO on advancing towards multiple inclisiran clinical readouts in the coming months, including the pivotal phase III readout of inclisiran in 3Q19, we maintain our high-conviction Buy rating and increase our PT to $90 (from $85)” the analyst wrote on April 26.
Note that Goldman Sachs analyst Paul Choi also upgraded MDCO from Hold to Buy ahead of the phase III data release. He also doubled his price target from $25 to $50.
3. Smartsheet Inc
Five-star Stephens analyst Dmitry Netis has a $55 price target on shares (30% upside potential). The analyst has just paid a visit to SMAR’s headquarters to get the low down from management. Post-meeting, he told investors “We reiterate our Overweight rating, as we increasingly have confidence in management's ability to scale revenues to a $1 billion revenue run rate within the next 4-6 years.”
In particular, the analyst believes that Smartsheet's customer focus—along with years of iterations to develop an engaging user experience—is widening the competitive gap against both established industry players (MSFT, GOOG, TEAM, NOW) and fast-moving competitors (Asana, Wrike).
“We continue to be impressed with the caliber of Smartsheet's management team and its product-focused, customer-first culture, which drives continued innovation and product development (~90% product roadmap is from customer feedback)” summed up Netis.
Overall the stock boasts a ‘Strong Buy’ Street consensus, with a Smart Score of 9 reflecting positive activity from bloggers, hedge funds, investors and Very Bullish news sentiment.
4. Amazon Inc
Last but not least comes A-grade mega-cap Amazon.com, Inc. (AMZN – Research Report). Not only does Amazon boast a Smart Score of 10, it also scores a record-breaking 36 recent buy ratings from the Street.
One of the many analysts singing AMZN’s praises is Goldman Sachs’ Heath Terry. Following solid earnings results, Terry ramped up his AMZN price target from $2,100 to $2,400. This means he sees shares surging a further 25% in the coming months.
The five-star analyst explained: "We continue to believe AMZN represents the best risk/reward in Internet given the relatively early-stage shift of workloads to the cloud, the transition of traditional retail online, and share gains in its advertising business, the long-term benefits of each we believe the market continues to underestimate for Amazon".
For the quarter, Amazon reported revenue in-line with the Street at $59.7 billion. That’s with operating Income of $4.42B coming in well ahead of RBC/Street, thanks to the Gross Margin upside and better than expected Fulfillment leverage. But the news that caught the eye of many consumers was the fact that Prime free shipping is going from 2 days to 1 day.
“This IS Big News, if you believe in Shipping Elasticity, which we do. The faster you ship, the more people buy… This could be a key growth catalyst for Amazon for some time” enthused RBC Capital’s Mark Mahaney following the announcement.
With this analysis it’s not surprising that AMZN boasts a Very Bullish news sentiment as the Smart Score demonstrates below:
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