Finding winning stock investments in 2018 may be difficult, given the eye-popping returns delivered in 2017. One approach is to focus on stock picks from analysts with the best track records, CNBC reports. A service called TipRanks has done just that. “TipRanks evaluates public stock recommendations made by financial analysts and financial bloggers, then ranks those experts based on their accuracy and performance,” per the company’s website.
After ranking more than 4,700 such experts, TipRanks recently produced a list of five top picks from the five analysts with the highest average returns and success rates with their picks in 2017, per CNBC. These picks include: Applied Materials Inc. (AMAT), Alexion Pharmaceuticals Inc. (ALXN), First Data Corp. (FDC), Constellation Brands Inc. (STZ) and Owens Corning (OC).
Semiconductors are becoming critical components of an ever-increasing number of goods. To fill this burgeoning demand, chipmakers are increasing their purchases of specialized equipment and software used in the production process, and Applied Materials is a major supplier thereof. Eric Ellis of B.Riley FBR says that Applied Materials is a “diversified grower well positioned for multi-year gains,” as quoted by CNBC.
Ellis’ target price is $71, or 32% above the close on January 3. The latest consensus price target among analysts, per CNBC, is $67.40, implying a gain of 25%. Note that CNBC’s story ran on December 27. The five top analysts’ price targets reflect are as of that date, while the consensus estimates that we present have been updated to reflect the January 3 figures on CNBC’s stock quote pages.
Alexion may have a $1 billion revenue opportunity with its new drug Soliris, according to Eric Schmidt, an analyst with Cowen & Co. per CNBC. Approved by the Food and Drug Administration (FDA) in October, Soliris is being touted as a major breakthrough in treating generalized myasthenia gravis (gMG), a rare but severe immune system disorder. The annual tab for treatment is a hefty $700,000 per patient. There are between 1,800 and 6,000 gMG sufferers in the U.S. alone, based on estimates from the Mysasthemia Gravis Foundation of America and Business Wire. (For more, see also: Alexion Soars After Biogen CFO Joins Company.)
Schmidt’s target price is $180, or 44% above its close on January 3. The recent consensus target price is $163.67, per CNBC, representing a 31% gain.
First Data is among the biggest payment processors worldwide, facilitating card and mobile payments both in-store and online, CNBC says. Darrin Peller of Barclays sees a “compelling” risk/reward ratio in 2018, as well as accelerating growth, CNBC adds.
Peller’s price target is $24, or +44%, while the latest consensus target is $20.91, or +26%. per CNBC.
‘Best in Class’
Constellation Brands is the top choice and “best in class growth story” among alcoholic beverage companies covered by analysts at Cowen & Co., as Vivien Azer of that firm told CNBC. She says that Constellation is poised to generate double-digit EPS growth. (For more, see also: Top 4 Beer Stocks for 2017.)
Azer’s target is $243, or +7%, and the latest consensus, per CNBC, calls for $238.16, or +5%.
Owens Corning has risen a stunning 81% over the past year, but Robert Wetenhall of RBC Capital sees further gains from “strong execution,” as CNBC puts it. The company is a major global player in insulation, roofing and fiberglass composites, and Wetenhall sees “double-digit EBITDA growth, robust free cash flow generation and multiple expansion,” making it one of RBC Capital’s top picks, per CNBC.
Wetenhall has a target price of $112, +19%, while the latest consensus calls for $91.67, implying a 3% decline from January 3, per CNBC. The latter figure appears to present a logical disconnect, given that nine of the analysts tracked by CNBC rate Owens Corning a strong buy, six call it a buy, eight rate it as a hold, and none give it a sell or underperform rating.