If you are stuck for investing inspiration right now, Goldman Sachs has some valuable tips for you. The firm has just released a note advising investors to focus on high revenue growth stocks. These are the kind of companies set to outperform as costs rise, says the firm.
“Mounting pressures from wage inflation and other input costs will pressure margins, making further expansion from currently all-time high margins unlikely,” explains David Kostin, Goldman Sachs’ chief US equity strategist. “As a result, growth in EPS will be driven entirely by top-line sales.”
And the numbers bear this out- Goldman Sachs calculated that this group of high revenue stocks has outperformed the S&P 500 by 400 basis points this year alone.
So with this analysis in mind, here are 7 stocks set to deliver the highest revenue expansion in 2019, according to the firm. By using TipRanks’ market data, we have been able to pinpoint the most compelling stocks in Goldman’s list. That’s according to the latest recommendations from the Street. Without further ado, let’s dive in now:
1. Vertex Pharmaceuticals (VRTX– Research Report)
Vertex Pharma is a leader in the cystic fibrosis space. For 2019, it’s forecasting explosive sales growth of 17%. That’s versus the sales growth for an average company in the S&P 500 of just 4%.
The stock has sparked a wave of buy ratings after it released encouraging trial data. As expected, Vertex announced the triple combination of VX-445, tezacaftor and ivacaftor met its targeted improvement in lung function (ppFEV1) in its dual P3 trial program.
Assuming they reach approval- which seems very likely at this stage- the triples unlock 90% of the CF population (68K patients), which should continue to drive topline growth.
“Bigger picture, both of the triple combinations continue to look very strong vs. existing therapies and what we’ve seen out of competitor programs to date, and the data today leave us incrementally more confident that the company’s dominance in the CF space will continue” JP Morgan’s Cory Kasimov (Track Record & Ratings) told investors on March 6.
Overall this ‘Strong Buy’ stock has 12 buy ratings with only 3 analysts staying sidelined. On average, these analysts see the stock rising 15% from current levels. See what other Top Analysts are saying about VRTX.
2. Centene (CNC– Research Report)
Centene, the US’s largest provider of individual coverage under the Affordable Care Act, is looking for 2019 expected sales growth of 18%.
“We continue to believe CNC’s Medicaid business is a solid foundation, with upside in its disciplined approach to expanding its individual, Medicare and specialty businesses. We think the shares are inexpensive at only 15.3x our 2019 EPS estimate” cheers Cantor Fitzgerald’s Steven Halper (Track Record & Ratings). He reiterated his buy rating after CNC reported strong 4Q18 results and raised its 2019 guidance. Looking ahead, Halper says shares are capable of surging 38% in the coming months.
Indeed, the stock has a very optimistic outlook according to the Street. TipRanks data reveals that 11 out of 12 analysts are recommending this ‘Strong Buy’ stock right now. Meanwhile the average analyst price target of $86 shows compelling upside potential of over 40%. See what other Top Analysts are saying about CNC.
3. Autodesk (ADSK– Research Report)
Autodesk is a leading design software and services company. Its software products enable customers to experience their ideas before they are real. By digitally creating and documenting designs, professionals like architects or engineers can optimize designs from the outset. This saves them time and money.
According to Argus analyst Joseph Bonner (Track Record & Ratings), ADSK is benefiting from the completion of its business model transition to subscription-based revenue sources. “While the company’s FY20 top-line guidance may have disappointed the market, we continue to see a strong multi-year revenue and profit ramp” says Bonner. Indeed, the company boasts one of the best 2019 sales growth figures at 26%.
He has just notched up his price target to $184 (18% upside potential). Meanwhile RBC’s Matthew Hedberg (Track Record & Ratings) ramps his price target to $200, and advises investors to look out for the company’s 3/28 analyst day. Overall we are looking at a Moderate Buy consensus from the Street. See what other Top Analysts are saying about ADSK.
4. Svb Financial (SIVB– Research Report)
Goldman Sachs is projecting 2019 sales growth of 26% for this US-based high-tech commercial bank. “SIVB remains our top pick among Smid-Cap banks over the long term” cheers Maxim Group’s Michael Diana (Track Record & Ratings). He believes this financial stock is capable of spiking 50% in the coming months.
Diana reiterated his buy rating after the company reported its sixth consecutive ‘blowout’ quarter with core EPS beating guidance by 8%. SIVB’s huge infrastructure build since the “tech wreck” in 1999 is what has positioned the bank to attract and keep customers of any size. This is what has made SIVB the dominant bank worldwide in the innovation ecosystem, says the analyst.
In the last three months SIVB has received only buy ratings from the Street. See what other Top Analysts are saying about SIVB.
5. Facebook (FB– Research Report)
When it comes to Facebook stock, everyone is concerned about two things. First, the falling engagement on the core Facebook platform. Second, regulation could stunt Facebook’s ability to use data to optimize ad solutions. However, neither of these concerns seem all that bad to Nomura analyst Mark Kelley (Track Record & Ratings).
In a research note issued this week, Kelley upgraded FB stock from hold to buy while boosting his price target to $215 (from $172), implying 24% upside potential.
Kelley commented, “We viewed the addition of an “open Facebook” icon inside Instagram late last year as a red flag, signaling that core FB engagement trends were worsening. But 4Q18 results showed a slight improvement in the DAU/MAU ratio in the US, indicating that engagement is intact. Additionally, management suggested it will soon begin to disclose platform-wide MAU figures, which should be better indicators of the underlying trends of the greater business.” That’s with predicted 2019 sales growth of 23% to look forward to.
The analyst continued, “We continue to believe that increased regulation will be a net positive for large platforms like FB, though there could be some headline risk in the near-to-medium term. On the whole, we do think the negative headline headwinds have largely been exhausted, with little reaction to negative press as of late.”
The Street largely seems to echo Kelley’ positive sentiment, considering TipRanks showcases FB as a Strong Buy. Out of 40 analysts polled in the last 3 months, 34 are bullish on FB stock, 4 remain sidelined, and 2 are bearish. See what other Top Analysts are saying about FB.
6. Align Technology (ALGN– Research Report)
Align Technology- the company behind the Invisalign clear aligners- is on track for 23% sales growth in 2019 according to Goldman Sachs. The company behind the groundbreaking teeth straightening device also has a ‘Strong Buy’ rating from top-performing analysts.
Baird’s Jeff Johnson (Track Record & Ratings) has just bumped up his ALGN price target from $255 to $286. The analyst explains that he sees growth accelerating in the second half of 2019, and this drives his valuation outlook higher. Shares are currently up over 20% year to date. See what other Top Analysts are saying about ALGN.
7. Netflix (NFLX– Research Report)
And the number one stock is: Netflix. It seems a full decade of unparalleled growth wasn’t enough for the online streaming giant. Looking ahead NFLX also has one of the highest predicted sales growth rates of 28%.
What’s telling about Netflix is that the picture actually becomes more bullish when we focus in on analysts with the strongest track record. While analysts have a Moderate Buy NFLX consensus, best-performing analysts have a Strong Buy consensus on the stock. In fact if we look at only recent ratings from four and five-star analysts, 23 out of 28 rate the stock a buy.
Most recently, Piper Jaffray’s Michael Olson (Track Record & Ratings) reiterated his buy rating with a $440 price target- indicating shares can surge 22% from current levels. He’s carried out a deep dive into Netflix search trends, revealing that NFLX is on track for a far stronger Q1 than the Street is currently expecting. That’s with potential upside for both international and domestic subscribers.
Specifically, consensus calls for 9.1% year-over-year domestic sub growth in Q1 vs the 12.6% indicated by the search index. For international, Q1 consensus calls for 37.9% year-over-year sub growth- but the index points to a far more impressive 51.3%. The analyst concludes that the index is “directionally positive” and shows a high probability of a strong Q1 for Netflix sub adds.
That’s not to say the stock doesn’t have its fair share of skeptics. Buckingham Research Group has just downgraded Netflix from Buy to Hold, citing management flux, increased competition and vulnerability to a market pullback. See what other Top Analysts are saying about NFLX.
Enjoy the Research Report on the Stocks in this Article:
Align Technology Inc (ALGN) Research Report
Autodesk Inc (ADSK) Research Report
Facebook Inc (FB) Research Report
Centene Corp (CNC) Research Report
Netflix Inc (NFLX) Research Report
Svb Financial Group (SIVB) Research Report
Vertex Pharmaceuticals (VRTX) Research Report
Find fresh investing inspiration with the TipRanks Analysts’ Top Stocks tool. This tool gives you the lowdown on the most popular stocks from the Street’s top analysts. These are the analysts that consistently outperform. You can find ‘Strong Buy’ stocks in the sector that interests you now. Go to Analysts’ Top Stocks now.
