Stock market corrections are painful, particularly for growth stocks, but volatile market conditions often allow investors to enter (or buy more of) a stock at an attractive entry point. Right now the markets are looking choppy, but some commentators still hold a year-end rally in sight. “Certainly, it’s a volatile time,” Ned Davis Research’s Ed Clissold told CNBC. Strong quarterly earnings and guidance are keeping him optimistic: “We still think we can get a year-end rally once we get through this weakness here.”
“After such severe selling, there is almost always a retest. We will be watching for signs of a successful retest in the coming days, namely fewer stocks leading to the downside as the popular averages approach or even breach the lows,” Clissold wrote.
In the meantime, here are five stocks that are looking particularly interesting at current levels. We include TipRanks market data to break down the Street outlook for each of these stocks.
Illumina (ILMN)
- Down 10% in the month
- Strong Buy Top Analyst Consensus
- 9% Upside Potential to $350 Price Target
What causes a cancer cell to mutate? What is the origin of a puzzling disease? Is it possible to prevent the next outbreak? Or safeguard the world’s food supply?
Illumina (ILMN – Research Report) is a global leader in genomics- and these are the kind of questions it is trying to answer. Its sequencing technologies enable us to understand genetic variations associated with health, disease, and drug response.
Canaccord Genuity’s Mark Massaro (Track Record & Ratings) has just reiterated his Buy rating on the stock. This comes with a bullish $375 price target (17% upside potential).
The five-star analyst writes: “No fault of its own, ILMN is down 21% since reaching $372/share just 9 days ago. We would buy ILMN right here, as ILMN, the dominant leader in sequencing, is powering huge population sequencing projects around the world at a scale never seen before.”
Recent news flow bolsters confidence in near-and-longer term strength in ILMN consumables growth, which marks upside to our near and out-year revenue projections, the analyst added. See what other Top Analysts are saying about ILMN.
Amazon (AMZN)
- Down 10% in the month
- Strong Buy Top Analyst Consensus
- 22% Upside Potential to $2,186 Price Target
E-commerce giant Amazon (AMZN – Research Report) has slipped recently- but the fundamental outlook remains as strong as ever.
Top Stifel Nicolaus analyst Scott Devitt (Track Record & Ratings) is now out with the stock’s highest price target. At $2,525 he sees price surging over 40% from current levels. That’s not all- Devitt also added the stock to the firm’s elite Select List, bumping out Alibaba in the process.
“We are replacing Alibaba with Amazon on the Stifel Select List in light of greater near-term optimism for Amazon, an uncertain China macro environment, and the opportunity created by recent AMZN price movement” explains Devitt.
Amazon is a leader in two large and rapidly growing markets, eCommerce and cloud services. Moreover, its developing ad business is well-positioned to deliver strong revenue growth over the intermediate- to long-term. “Strong momentum in the higher-margin cloud services and advertising business are elevating the near/intermediate-term margin trajectory for the company” the Stifel analyst writes.
Turning to the future, strategic investments (think Prime membership, emerging geographies and video content) support long-term growth while advancing the company’s leadership position. See what other Top Analysts are saying about AMZN.
PayPal (PYPL)
- Down 14% in the month
- Strong Buy Top Analyst Consensus
- 26% Upside Potential to $99 Price Target
Word on the Street: PayPal’s (PYPL – Research Report) weakness spells a buying opportunity. This is according to both Deutsche Bank’s Bryan Keane and William Blair’s Robert Napoli.
William Blair analyst Robert Napoli (Track Record & Ratings) says that while recent acquisitions and the sale of its credit business “could complicate near-term visibility, PayPal’s (PYPL) fundamentals remain strong.”
With the share price pull back, taking the valuation to 17 times 2019 EBITDA, we are now looking an attractive entry point for long-term investors, Napoli tells investors in a research note.
He sees earnings growing at a high-teens to 20% rate over the medium term.
Meanwhile Keane turns his attention to the stock’s October 18 earnings report. Management has guided for Q3 revenue between $3.62- $3.67 billion, representing 12% to 13% year-over-year growth.
“We believe the key swing factor will be PYPL’s preliminary guide for 2019, given the rev hit from the US consumer credit portfolio sale (completed July 3) and the dilution from acquisitions (we est. ~$0.10 EPS dilution)” Keane writes. See what other Top Analysts are saying about PYPL.
Home Depot (HD)
- Down 8% in the month
- Strong Buy Top Analyst Consensus
- 15% Upside Potential to $221 Price Target
The US’s largest home improvement store has had a tough ride recently. But Home Depot (HD – Research Report) nevertheless represents a savvy play on the rising trend for do-it-yourself home improvements.
“Coupled with a strong underlying consumer environment, and little impact (thus far) from rising rates and slowing housing turnover, we remain constructive on the home improvement group” cheers top Wells Fargo analyst Zachary Fadem (Track Record & Ratings).
He has just boosted his price target on the stock to $230 (20% upside potential).
However, perhaps this is a stock more suited to the risk-tolerant investor. “While the ride could get bumpier, we remain constructive on HD’s strong execution, multi-pronged approach to share gains (Pro, MRO, Omnichannel, etc.), and potential upside to our model” Fadem writes. See what other Top Analysts are saying about HD.
Nvidia (NVDA)
- Down 9% in the month
- Moderate Buy Top Analyst Consensus
- 19% Upside Potential to $293 Price Target
This chip stock has exposure to all the right tech trends, from gaming and artificial intelligence to self-driving cars. Plus new areas in science and medicine should continue to drive increasing demand for Nvidia’s (NVDA – Research Report) advanced high-speed GPUs.
And now is the perfect time to jump in according to Argus analyst Jim Kelleher (Track Record & Ratings). He has kept his Buy rating and $300 price target on Nvidia, indicating 22% upside potential ahead.
The stock has been “caught up” in the broader tech selloff. This is on top of potential risks from China-U.S. trade tensions explains Kelleher. However, he recommends taking advantage of the pullback to add to or initiate long positions as Nvidia remains a “preeminent player in the emerging AI and machine learning economy”.
In support of his bullish thesis, Kelleher cites Nvidia’s recent GPU Compute Conference profiling its RAPIDS data science acceleration platform, as well as Volvo picking NVidia Drive AGX Xavier for its production cars starting early in the 2020s. See what other Top Analysts are saying about NVDA.
Enjoy Research Reports on the Stocks in this Article:
Home Depot (HD) Research Report
Illumina (ILMN) Research Report
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