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3 market-beating stocks for your 2018 radar (with big upside potential)

Which three under-the-radar stocks have both a Strong Buy analyst consensus rating and big upside potential? We looked for three top stocks (outside of the usual big-name tech stocks) which make compelling investing opportunities. One of these- biotech Gemphire Therapeutics- has upside potential of 145% for the next 12 months according to the Street.

TipRanks tracks analyst ratings on over 5,000 stocks. These ratings are then collated into an overall analyst consensus rating- be it Strong Buy, Moderate Buy, Hold, Sell etc. The result: you can use TipRanks powerful stock screener to filter for only stocks which have a bullish outlook from the Street right now.

Even better, analysts are ranked according to their success rate and average return so you can see what only the best analysts are recommending right now in terms of 1) the overall consensus rating and 2) the upside potential of the average 12-month price target from the current share price.

Bearing this in mind, let’s see what the Street has to say about the following three stocks:

Gemphire Therapeutics (NASDAQ:GEMP)

This little-known biotech stock has only received three buy ratings from top analysts in the last three months. However, these three analysts are all confident on one thing: that Gemphire has serious upside potential. The average analyst price target comes in 145% above the current share price.

Gemphire commercializes and develops therapies to help patients with cardiometabolic disorders, including dyslipidemia and NASH. Its lead product candidate- gemcabene – is a novel lipid-altering drug that has already been tested in 895 patients.

Canaccord Genuity analyst John Newman likes what he sees. He reiterated his buy rating on October 13 with a bullish $31 price target (225% upside potential). “Gemcabene is an underappreciated asset in the LDL-C, SHTG, and hsCRP lowering space. The drug’s extremely clean safety profile and meaningful efficacy will lead to eventual FDA approval, in our view, as well as success in Severe HyperTriGlyceride patients (SHTG)” says Newman. In fact, Newman is modelling $1.8B US peak sales for gemcabene in Severe Hyper Triglycerides alone.

The next key catalyst to look out for: the INDIGO-1 Phase 2/3 trial for gemcabene for SHTG scheduled for the first quarter of 2018.

Lumentum Holdings (NASDAQ:LITE)

You may not have heard of Lumentum, a market-leading manufacturer of optical components and commercial lasers. However, its optical goods are part of virtually every type of telecom, enterprise, and data center network. This ‘Strong Buy’ stock has the seal of approval from the Street: in the last three months, 8 out of 10 analysts have published buy ratings on LITE. Meanwhile the average analyst price target suggests LITE has 20% upside potential to run in the coming months.

And the most bullish analyst of the pack, B Riley’s Dave Kang, sees a very promising outcome arising from LITE’s China exposure in the coming year. As a result, he places an $81 price target (40% upside) on the stock. Here he explains why 2018 should be a turning point for optical component demand in China:

“Our research indicates that Chinese shipments in 2018 are expected to be 120k-130k (flat to up 18% Y/Y), and since most of excess inventories are expected to be depleted by the end of 2017, demand for 100G optical components could more than double…Based on China’s promising 2018, we would be buyers of Buy-rated names with China exposure which includes LITE.”

At the same time, a Chinese optical industry website has just reported that China Telecom (CHA) is getting ready to expand its 100G backbone network. The conclusion: keep your eyes peeled because this stock has an exciting year ahead.

Seres Therapeutics (NASDAQ:MCRB)

This groundbreaking biotech has huge potential according to the Street. Seres is working on the idea that you can treat infectious and inflammatory diseases by adding ‘good’ bacteria to your digestive tract. According to analysts, its lead product candidate, SER-109 (made up of microbial spores) could revolutionize the treatment of diseases like inflammatory bowel disease.

“Seres is an innovator operating at the forefront of scientific discovery, which has contributed to some setbacks in product development. However, we believe the company’s pivotal ECOSPOR III trial of SER-109 is thoughtfully designed to avoid the shortcomings from the drug’s Phase 2 experience” writes Oppenheimer analyst Mark Breidenbach. He initiated coverage on Seres on 12 October with a $19 price target.

Additionally, Breidenbach adds that Seres recently reported compelling top-line data in ulcerative colitis (UC). He thinks this could reinvigorate investor interest in microbiome medicine. And Breidenbach isn’t the only analyst with a bullish take on the stock’s prospects. TipRanks reveals that in the last three months, MCRB has only received buy ratings. Their average Seres price target: $18.50. Given that the stock is currently trading at just $11, this translates into remarkable upside potential of 68%.

Find ‘Strong Buy’ stocks to meet your own investing criteria on TipRanks now

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Harriet Lefton
Harriet Lefton, originally from the UK, began her career as a journalist specialising in the niche world of metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer. Now she has turned her attention to the world of financial blogging, covering US stocks, analysts and all manner of things finance-related.

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