We individual investors rely on Wall Street analysts more than we realize.
Every time quarterly earnings “impress” or “disappoint,” they do so based on the numbers analysts forecast. Anticipating next year’s earnings? Don’t worry — analysts have the consensus figures all worked out for you.
And of course, if you’re looking for the best stocks to buy now, Wall Street number-crunchers will be more than happy to tell you which ones are the biggest steals .. and the biggest ripoffs.
They’re not infallible of course (who is?), but they’re working with a lot more information than the average investor, so it pays to keep tabs on what analysts expect stocks to do. And an analyst’s preferred method of gazing into the crystal ball is the infamous “price target,” which aims to predict where shares should be trading within the next 12 months.
The following seven stocks all have price targets much, much higher than where they currently trade. In fact, judging by their price targets, the following names should be some of the best stocks to buy right now, as every one of them is expected to trade at least 25% higher within a year.
So just who are these potential high-flyers?
7 Stocks to Buy: Tesla Motors Inc (TSLA)
Price Target: $286.47
Wall Street has big dreams for Tesla (TSLA), the innovative young company that’s already become synonymous with the emerging electric car industry. Led by modern day da Vinci and real-life Iron Man Elon Musk, Tesla does things other auto manufacturers would never dream of.
In fact, TSLA ventures so far off the beaten path that investors have a tough time determining whether the company is an automaker, a Silicon Valley tech giant or an energy pioneer. This identity crisis doesn’t bother Musk … or Wall Street analysts, for that matter, who expect the stock to return to 52-week highs above $285/share, a 30% premium to current levels.
While the highly anticipated Tesla Model 3 will be unveiled in March 2016, a few analysts are beginning to suspect that TSLA may also reveal plans to go head-to-head with Uber in the ride-sharing industry.
After all, if Tesla ends up building an autonomous vehicle, it wouldn’t have to worry about those pesky labor costs Uber has to deal with.
7 Stocks to Buy: JD.com Inc (ADR) (JD)
Price Target: $37.74
Up 17% already in 2015, analysts expect JD.com (JD) to continue its rally over the next 12 months. Like TSLA, the consensus price target for this Chinese e-commerce giant is set eerily close to its 52-week highs.
Analysts clearly think it’s time to retest those levels.
JD.com, as the No. 2 player in China’s booming e-tailing industry, is one of the more straightforward stocks to buy. Sure, it’s nowhere near the size of Alibaba (BABA), but it doesn’t need to be. During Singles’ Day, the Chinese shopping holiday similar to Black Friday in the U.S., JD saw the number of orders rise 130% year-over-year, and the value of those orders rise 140%.
Looks like JD is gaining some ground on Alibaba, which saw gross merchandise volume rise 60% year-over-year.
7 Stocks to Buy: Ambarella Inc (AMBA)
Price Target: $96.80
Why? Well, because GPRO reported a soft third quarter, and that must mean AMBA is doomed.
I’m being facetious, of course. Ambarella is doing just fine, and, as the $96.80 price target implies, it’s trading at firesale prices.
Sales growth is red-hot, with revenue expected to soar 48% in the fiscal year ending in January. AMBA isn’t a one-trick pony; it also supplies chips to the automotive, drone and IP security camera industries (all of which are growing rapidly). By virtue of its elevated target price, it’d be tough not to proclaim AMBA one of the best stocks to buy now.
7 Stocks to Buy: Organovo Holdings Inc (ONVO)
Price Target: $4.17
You’ll be forgiven if you haven’t heard of Organovo Holdings (ONVO). Last year it did $571,000 in revenue, and while those figures are expected to triple this fiscal year, you don’t hear of many public companies with revenue of just $1.7 million.
While you can easily take issue with the fact Organovo is an unprofitable company trading for 274 times sales, this company is at the same time a really tough cookie to value. That’s because the only way ONVO is worth investing in is if you believe it can make meaningful progress in exciting but largely untested fields … fields like 3D bioprinting.
That’s right, Organovo actually makes live human tissues for the purposes of medical research. While its model has traditionally been to develop tissue for third-party drug developers, ONVO hopes to start developing drugs of its own soon as well.
This one feels like either a home run or a strikeout, and right now analysts are forecasting a homer.
7 Stocks to Buy: NXP Semiconductors NV (NXPI)
Price Target: $103.70
NXP Semiconductors (NXPI), a large Dutch semiconductor company, was recently hammered after reporting modest third-quarter results but guiding much lower on fourth-quarter revenue than most analysts expected.
Shares took a 17% beating after management guided for $1.3 billion in Q4 revenue, way below the consensus $1.55 billion expectation. However, that guide-down was due to excess inventories, according to some analysts, and FBR Capital’s Christopher Rolland even said he expected the guide-down on inventories.
While Rolland kept his $115 price target on NXPI, others in the field are less bullish, looking for about $104/share in the next year (still a healthy premium to roughly $80/share levels today.) Its pending $40 billion merger with Freescale Semiconductor (FSL) is expected to reap large synergistic cost savings in the years following its close.
If all goes as planned, NXPI could easily be one of the best stocks to buy — not just for the next year but for the next three to five years as well.
7 Stocks to Buy: Micron Technology, Inc. (MU)
Price Target: $21.20
Another semiconductor company, Micron Technology (MU), graces the list today as well. While its 57% year-to-date losses have been rather unflattering, analysts take a brighter outlook on Micron’s future.
It’s been a tough year for semiconductor stocks in general, as investors broadly feel the space is becoming increasingly commoditized. While that’s true, Micron should have some degree of insulation from this trend, particularly if the technology it co-developed with Intel (INTC), 3D XPoint, is actually “revolutionary.”
The Wall Street Journal reported on the amazing claims the two companies made about the new chip this summer:
“The companies say the chips they plan to sell next year will be up to 1,000 times faster than the NAND flash memory chips now used in most mobile devices, while storing 10 times more data than dynamic random access memory, or DRAM, chips that are another mainstay of electronics hardware.”
In other words, this sort of tech definitely isn’t commoditized.
7 Stocks to Buy: Zeltiq Aesthetics Inc (ZLTQ)
Price Target: $42.71
Last but not least, analysts expect Zeltiq Aesthetics (ZLTQ) to offer attractive returns going forward. Already up 15% this year, ZLTQ could soar another 30% or so in the next year, as revenues exceed $300 million in fiscal 2016. Just last year, revenues were less than $175 million.
The company, which makes products aimed at reducing unwanted fat, was recently added to Goldman Sachs‘ (GS) “Conviction Buy” list with a price target of $43, slightly above the overall consensus. Said Goldman analyst David H. Roman,
“Going forward, we see ZELTIQ as a differentiated asset given exposure to new product cycles and consumer spending patterns:
Across healthcare, ZELTIQ avoids many of the negative controversies in the sector (i.e. drug pricing, utilization uncertainty) as well as offering idiosyncratic “offensive” characteristics (outsized growth and improving returns). Lastly, we see the company at the cusp of expanding its total addressable market (new indications), which should add confidence in the outer year growth story.”
As of this writing, John Divine was long AMBA stock, Jan 2017 NXPI $95 calls, Jan 2017 NXPI $105 calls, and Jan 2018 NXPI $110 calls. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.