We are now rolling into Q4 2017 and the new year is just around the corner. Now is the time to start preparing your portfolio for 2018, so what are some of the best “smart money stocks” to buy that will line you up for 2018 in style?
I set out to pinpoint the 10 smartest buys in the market right now. I wanted to find stocks that have a glowing future ahead — in both the short- and long-term.
To do this, I turned to TipRanks’ innovative ‘Most Recommended Stocks‘ tool. Top-recommended stocks are selected based on a TipRanks’ developed formula, factoring in ratings made by the best performing analysts.
These are the analysts that have the highest success rate and average return. The best part is that you can order the results by upside potential — a crucial factor in assessing a stock’s growth potential. I also scanned the stocks to ensure that they have an overall ‘Strong Buy’ analyst consensus rating, making these stocks the smartest smart-money buys around.
Now let’s take a closer look at the top 10 stock picks for 2018:
Smart Money Stocks to Buy: UnitedHealth (UNH)
I recommend keeping a close eye on U.S. health insurance giant UnitedHealth Group Inc (NYSE:UNH). The company is due to report revenue of over $200 billion this year. And over the last three months UNH has received 11 back-to-back buy ratings from analysts.
No hold or sell ratings here.
One of these analysts is Jefferies’ David Windley. He is ranked a very impressive No. 13 out of 4,669 analysts ranked by TipRanks. Windley reiterated his UNH buy rating on Sept. 11 with a $215 price target (9.6% upside from the current share price).
Analysts are busy tracking talks between UNH and Chilean healthcare company Banmedica SA. In early September, UNH confirmed it is in non-binding talks to acquire Banmedica for $3.47 per share. According to Deutsche Bank, the deal would be worth at least $3 billion once you include debt. UNH CEO Dave Wichmann is vocal about his plans to ramp up UNH’s international business — a valuable new revenue stream.
Indeed, the company already completed a similar deal with its $4.9 billion takeover of Brazilian healthcare company Amil Participacoes back in 2012.
Smart Money Stocks to Buy: Heron Therapeutics (HRTX)
The following commercial-stage biotech company is extremely undervalued.
Heron Therapeutics Inc (NASDAQ:HRTX) aims to address unmet medical needs, with a focus on developing treatments for cancer and pain. The stock has received seven back-to-back buy ratings from analysts in the last three months. These analysts are predicting huge upside for the stock of over 100% in the next 12 months.
For example, on Sept. 27 four-star Northland Securities analyst Carl Byrnes initiated coverage of the stock with a bullish $40 price target. This works out at a whopping 149% upside from the current share price. Similarly, top Mizuho Securities analyst Difei Yang also started to cover the stock this week with a $28 price target (75% upside).
The market is bullish on Heron’s HTX-011 product, which has the advantage of targeting both pain and inflammation post-surgery. According to Byrnes, HTX-011 is set up to become the best-in-class therapy for postoperative pain management. He likes the fact that the drug provides sustained relief for the first 72 hours, reducing the need for highly-addictive opioids.
Shares could also soar following Nov. 12. On this date, the Food and Drug Administration announces whether it will approve Heron’s CINV treatment Sustol. We can be optimistic as the drug has already been very well received says Byrnes.
Smart Money Stocks to Buy: CBS Corp (CBS)
She recently reiterated her buy rating on CBS Corporation (NYSE:CBS) with an $80 price target (38% upside). According to Martin, CBS’s All Access streaming service and Showtime’s over-the-top channel will reach over 8 million subscribers by 2020. As a result, All Access and Showtime alone could generate revenue of $1.2 billion for CBS in 2020.
Martin believes that All Access will make five original TV series by 2020, of 10 to 13 episodes each. She says: “We expect that CBS will release one episode per week on its OTT services and start a new original series one to three weeks before another series ends. This maximizes the likelihood that consumers pay the bill every month for a year”. We can see that Martin has a strong track record with a 65% success rate and 15% average return across her stock recommendations.
Overall, CBS has received 11 recent buy ratings and 3 hold ratings. But it is the average analyst price target on CBS of $75 that catches the eye. This translates into impressive upside potential for CBS of 31% in the next 12 months. Note that the stock has also just received its highest price target yet of $81 from top Benchmark analyst Daniel Kernos.
Smart Money Stocks to Buy: Alibaba (BABA)
Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) has soared by 80% since the start of the year. BABA, which now has a market cap of over $470 billion, is benefiting from the rapid increase in the Chinese middle and upper middle classes. Consulting firm McKinsey calculates that urban consumer spending in China ( online sales + Brick & Mortar sales) will more than double from $1.5 trillion in 2012 to $4 trillion.
So it is no surprise that the stock has the double-whammy of strong Street support and big upside potential. In the last three months, BABA has received 14 straight buy ratings indicating a bright future for this fast-growing stock. These analysts predict that BABA can reach $195 in the next 12 months (14.4% upside from the current share price).
Only recently, on Sept. 26, Wells Fargo analyst Ken Sena came out with BABA’s highest price target yet of $225 (31% upside potential). Sena is a top analyst to trust with a 75% success rate and 16% return across his BABA ratings. Meanwhile, MKM Partners’ Rob Sanderson says BABA can reach $220 as it has the best fundamentals out of all the internet mega caps.
Smart Money Stocks to Buy: Adobe (ADBE)
Software giant Adobe Systems Incorporated (NASDAQ:ADBE) is the creator of well known applications, including Photoshop and Acrobat Reader.
In the last couple of weeks, Adobe has received multiple buy ratings from top analysts despite share price volatility. On Sept. 20, share prices slid due to a shortfall in Adobe’s digital marketing unit. However, overall, ADBE reported strong results for the fiscal quarter. So don’t be too concerned say analysts, who call the hiccup a “small speed bump.”
Indeed, top Piper Jaffray analyst Alex Zukin recommends taking this “rare” pullback as a buying opportunity. He reiterated his buy rating on Sept. 20 with a $180 price target (22% upside). For investors still sitting on the fence, note that Zukin has an impressive track record with his ADBE recommendations with a 78% success rate and 24.5% average return. He is confident that Adobe has some of the best intermediate- and long-term fundamentals in the space.
Plus Zukin points out that the Experience Cloud bookings miss is the result of a longer sales cycles and not a more fundamental issue such as a change of demand. In the words of CFO Mark Garrett: “The scale of our engagements is growing with customers increasingly adopting multiple Adobe solutions, which is leading to larger deal sizes but longer sales cycles.”
Smart Money Stocks to Buy: Micron (MU)
This exploding semiconductor stock has just reported another very robust quarter of earnings. As a result Micron Technology, Inc. (NASDAQ:MU) still has plenty of upside left even though it is trading at near-record prices. Goldman Sachs even says Micron ‘looks cheap’ at its current share price of $38.
Indeed, Micron has one of the best stock ratings out of all the 5,000-plus stocks on TipRanks. In the last three months, 20 out of 22 analysts have rated MU a ‘buy’. These analysts are predicting that in the next 12 months, Micron will reach $49 — a 33% upside from the current share price.
Five-star Needham analyst Rajvindra Gill believes the stock can climb by an eyebrow-raising 106% in the next year. Gill ramped his price target by $26 to $76 on Sept. 27. The analyst, who is ranked 28 out of 4,660 analysts on TipRanks, explains:
“We believe this multiple is reasonable as we are simply applying a median historical multiple on a discounted earnings run-rate of $2.16 EPS /q (Nov. guidance). Currently, the stock is trading at a trough multiple on the perception of a “peak earnings cycle”. We assert it should be trading at a market multiple on ongoing earnings growth. We don’t believe we are at the peak of the cycle as end markets for DRAM are significantly more diverse than in years past; stabilizing the volatility of the pricing and perhaps lengthening the contracts.”
Smart Money Stocks to Buy: Expedia (EXPE)
A key smart money buy is this leading online travel company that has enjoyed stellar growth over the last year.
Expedia Inc (NASDAQ:EXPE) is the name behind multiple websites, including Trivago and Airbnb rival HomeAway. Following the departure of former CEO Dara Khosrowshahi to Uber, Expedia has appointed CFO Mark Okerstrom to the head role. Given his financial background, Okerstrom is well-positioned to help Expedia manage its acquisition sprees. Recent investments include London’s SilverRail Technologies and Indonesia’s Traveloka.
Five-star RBC Capital analyst Mark Mahaney gives this bullish analysis of Expedia’s prospects: “We expect the company will continue driving execution across its core set of global assets while investing aggressively in tech and marketing to scale up HomeAway. We see a tremendous growth runway for HomeAway in particular, as the company grows its footprint domestically and pushes into International markets next year.” Expedia picked up HomeAway for a cool $3.9 billion in 2015.
Mahaney has a buy rating and $175 price target on the stock — suggesting upside of just over 20%. This falls slightly above the $173 average analyst price target, which is still 22% above the current share price. In the last three months, 15 analysts published buy ratings on the stock vs one lone bear.
Smart Money Stocks to Buy: Alexion Pharmaceuticals (ALXN)
Global biopharma Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has spiked in the last three months from $120 to $140. The good news is that the Street predicts that Alexion still has serious growth potential. Top analysts have an average analyst price target on the stock of $161 — close to 17% upside from the current share price. In the last three months, 11 out of 13 analysts have recorded a bullish sentiment on ALXN.
Take, for example, top Leerink Swann analyst Geoff Porges. He reiterated his ALXN buy rating on Sept. 25 with a $182 price target (30% upside potential). Porges believes that Alexion’s Soliris for the treatment of blood disorders will show dominance all the way through into 2020. Even then, its biggest challenge will be from Alexion’s own next generation complement inhibitor, ALXN1210. So far Soliris is the only terminal complement inhibitor on the market, and it is more effective than any of rival offerings that have advanced to pivotal trials says Porges.
According to Alexion, Soliris works by inhibiting terminal complement, a part of the immune system. When activated in an uncontrolled manner, this complement plays a role in serious diseases like paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).
Smart Money Stocks to Buy: Neurocrine (NBIX)
Our No. 9 smart buy is Neurocrine Biosciences, Inc. (NASDAQ:NBIX), a very promising biopharma focused on neurological and endocrine diseases and disorders. Analysts are unanimously bullish on the stock with 7 buy ratings in the last three months. And crucially, the stock still has big upside potential of almost 30% from the current share price of $59.
Neurocrine’s Ingrezza drug for the treatment of movement disorder tardive dyskinesia is a best-in-class therapy. The drug was granted approval by the FDA back in April, causing shares to soar over 20%. Importantly, the drug has no black-box suicide ideation warning and it is competitively priced. As a result, Oppenheimer’s Jay Olson is not concerned about a rival treatment heading to market. Here he compares Ingrezza with Teva Pharmaceutical Industries Ltd (ADR)’s (NYSE:TEVA) recently approved Austedo:
“We found four distinct areas where we believe Ingrezza may have important advantages over Austedo including: 1) efficacy, 2) safety, 3) ease of use, and 4) cost… We believe this label comparison supports our estimates of a two-thirds patient share for Ingrezza vs. one- third for Austedo in TD leading to US Ingrezza sales of $1.4B in 2025.”
Smart Money Stocks to Buy: Applied Materials (AMAT)
Applied Materials, Inc. (NASDAQ:AMAT) is buzzing right now. This semiconductor capital equipment maker is soaring following a very bullish report from top JP Morgan analyst Harlan Sur. He reiterated his buy rating on the stock on Sept. 28. Sur believes AMAT will benefit from the chip-making craze:
“We believe a combination of market share gain (a few percentage points share gain in silicon business over the next few years), incremental revenue opportunity, broader product portfolio, increased penetration with existing customers, increased wafer capital intensity at foundry/logic/memory, and exposure to the fast-growing display market will drive growth for AMAT over the next two to three years.”
And Sur isn’t the only bullish analyst on the Street. The stock, which has soared 51% in the last year, has 13 straight buy ratings from analysts. This includes two stock upgrades in the last couple of weeks from RBC Capital and Goldman Sachs as well as a number of price target increases.
The $57 average analyst price target now works out at 12% upside from the current share price.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,500 analysts, 5,000 financial bloggers and even 37,000 corporate insiders. As of this writing, Harriet Lefton did not hold a position in any of the aforementioned securities.