Wall Street “experts” can and frequently do get things very wrong. But as they say, there is wisdom in crowds — and a preponderance of analysts are saying that a stock is going to chug higher, there’s a pretty safe bet that the group is right, even if some of the individuals in that group miss the mark.
That’s why I’m a big believer in median price targets for hot stocks. Individual upgrades or downgrades can be way off based on the arbitrary math of certain individuals; however, when 20 or 30 experts all look at a company and come up with a consensus target, you can be pretty sure it’s at least directionally accurate, even if the actual per-share price may not be precise.
When you see highly covered stocks with massive upside targets, then, it’s time to buy with confidence.
Here are five stocks where the median upside target is 30% or more higher than current pricing.
Stocks to Buy for 30%-Plus Upside: Allergan PLC (AGN)
Median price target: $378 — 40% upside from here
Analysts are ga-ga over Allergan (AGN), with the median price target for this generic drug company an amazing 40% higher from here.
AGN stock has a reasonable forward price-to-earnings ratio of about 16.5, and trades for just 1.6 times book value, so there is still bargain potential here for new money.
It’s hard not to like a $100 billion company that doesn’t have to worry about patent expirations, particularly given the stability that can be found in healthcare during a choppy market.
Stocks to Buy for 30%-Plus Upside: Delta Air Lines, Inc. (DAL)
Median price target: $60 — 31% upside from here
Airline stocks are highly dependent on fuel prices, but crashing crude has been a big boon to Delta Air Lines (DAL) – and when you couple that with consolidation in the industry via the merger forming United Continental (UAL) allowing for increased fares, it’s clear skies ahead for Delta.
Even if the top line is flat, earnings are set to soar 37% this year and 23% next year thanks to these trends.
Stocks to Buy for 30%-Plus Upside: Avago Technologies Ltd (AVGO)
Median price target: $165 — 39% upside from here
Semiconductor stocks have been volatile in 2015, and Avago Technologies (AVGO) is no exception. While up 16% on the year, shares are still down about 20% from their summer highs.
However, a tailwind created by a surging top line and earnings that are set to soar about 80% this fiscal year are stoking the flames under this red-hot stock.
Even after Avago’s outperformance, shares trade at a forward P/E of only about 12 right now, so investors don’t have to fear buying a top.
Stocks to Buy for 30%-Plus Upside: McKesson Corporation (MCK)
Median price target: $254 — 38% upside from here
McKesson (MCK), like the aforementioned Allergan, is a healthcare stock that can do no wrong.
A supplier of medical IT platforms as well as drug distribution services, MCK is a great stock that mixes recession-proof characteristics with a nice track record of growth. Meanwhile, 14% EPS expansion is expected this fiscal year, with another 14% anticipated for next year.
Stocks to Buy for 30%-Plus Gains: Fitbit (FIT)
Median price target: $52 — 49% upside from here
While the fitness wearables company has fallen on hard times as of late, Fitbit (FIT) remains above its IPO pricing from this summer and is hoping for a strong performance in what will be only its second quarterly earnings report as a public company.
The massive growth potential of wearables has many optimistic about the longer-term performance of FIT stock, even if shares have suffered and declined sharply from their August highs.