The first half of 2018 hasn’t been easy. And there’s no promise that the second half of the year will be any easier. Far from it. Market commentators still can’t decide whether the bull market is here to stay or whether a bear market is lurking just around the corner.
Add in a number of turbulent political factors — from potential trade tariffs to an unstable Europe and shifting relations with North Korea — and the situation becomes even stickier. But help is at hand.
Here, I turned to the Street to see what top stock for 2018 the Street’s top analysts are betting on for the second half of the year. I used TipRanks’ stock screener to pinpoint stocks that tick the following boxes: a Strong Buy top analyst consensus rating, and big upside potential from the current share price to the top analyst average price target.
This is based only on ratings from the last three months. And by cutting out underperforming analysts we can be sure that we are only following the advice of analysts who consistently get it right. In these rocky times — that’s pretty crucial.
So let’s take a closer look at these seven top stock picks now:
Top Stock for 2018: General Motors (GM)
While Tesla, Inc. (NASDAQ:TSLA) may take up most of the attention on the auto-front, it is worth keeping a close eye on old stalwart General Motors Company (NYSE:GM). The company has just announced a massive new investment by the billion-dollar SoftBank Vision fund. The fund will now invest $2.25 billion in GM’s self-driving Cruise unit. Following the investment, GM will also dedicate a further $1.1 billion to GM Cruise Holdings LLC.
Ultimately the goal is that the unit can reach commercialization at scale in 2019. “Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion” commented GM CEO Mary Barra. Meanwhile, SoftBank added that it is impressed by the progress made by the unit while “the GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage.”
So far the Street has reacted positively to the news. Top-rated JP Morgan analyst Ryan Brinkman called the investment “positive on a number of fronts.” He describes the investment as “putting a stake in the ground relative to the value of Cruise” because it shows “just how inexpensive GM’s core automotive operations really are.” Brinkman sees the stock spiking to $58 in the coming months (32% upside potential).
Overall GM has received seven back-to-back buy ratings from the Street in the last three months. These ratings come with a $53 average price target (22% upside potential).
Top Stock for 2018: Loxo Oncology (LOXO)
This Triple-A rated biotech is buzzing right now. In the last week, Loxo Oncology, Inc. (NASDAQ:LOXO) has received no less than seven buy ratings from the Street. These analysts are cheering positive results from Phase 1 clinical trials. The biotech revealed that its experimental cancer drug LOXO-292 shrunk 77% of RET-fusion positive cancers- an incredibly impressive result.
“The durability of both [overall response rate] and stable disease within each of these subgroups remains impressive – and the almost-too-good-to-be-true safety/tolerability profile confirms on-target selectivity while further-distancing LOXO-292 on the competitive differentiation front,” stated five-star Stifel analyst Stephen Willey.
He reiterated his LOXO Buy rating on June 4 while ramping up his price target 18% to $225. From current levels, this indicates 22% further upside potential.
At the same time, Morgan Stanley’s Matthew Harrison boosted his peak sales prediction for LOXO-292 to $1 billion up from $700 million previously. Our data shows that LOXO has 100% support from the Street right now. These analysts have an average price target on the stock of $219 (19% upside potential).
Top Stock for 2018: Deere (DE)
If you think of a tractor, you think of John Deere. And now its manufacturer, the world-leading tractor maker Deere & Company (NYSE:DE), is poised to soar. If we look at the Street, we can see a triple whammy of recent rating upgrades from UBS, Evercore ISI and Merrill Lynch. So what’s driving this bullish shift in sentiment? Three words: higher grain prices.
“We think the slow recovery in Deere’s large agricultural business could accelerate in fiscal year 2019 with higher grain prices, which have a favorable set-up entering the growing season,” said UBS analyst Steven Fisher in a note on May 24. “We think higher grain prices would stimulate a recovery in North American high-horsepower tractors, which have been declining for five years.”
And good news for shareholders, Fisher is also optimistic about the chance of a dividend raise to reflect stronger earnings. He is now anticipating a 30% payout ratio for fiscal 2018 (up 21%) with $1.25 billion for share buybacks.
In total Deere now boasts eight buy ratings from analysts in the last three months. So no hold or sell ratings here. With shares now trading at $151, the average analyst price target works out at 25% upside potential.
Top Stock for 2018: TG Therapeutics (TGTX)
TG Therapeutics, Inc. (NASDAQ:TGTX) is a novel biopharma developing treatments for B-cell malignancies and autoimmune diseases. Shares are popping over 10% right now following stellar data from ongoing Phase 2 clinical trials. The company is currently testing PI3K delta inhibitor umbralisib (TGR-1202) for cancers that originate in the blood.
“We are maintaining our Strong Buy rating” writes top-rated Raymond James analyst Reni Benjamin. “Umbralisib demonstrated compelling efficacy in BTK or PI3Kδ intolerant CLL patients.” He continues: “With the Phase III UNITY-CLL study approaching an inflection point in the coming months, the potential to create value in the multi-billion dollar MS market, and a pro forma cash position of $105 million, we continue to recommend TGTX shares to long-term oriented, risk-tolerant investors.”
His rating comes without a price target. However, five-star H.C. Wainwright analyst Edward White has just reiterated his Buy rating with a $38 price target. Prepare to be blown away! Given that the stock is currently trading at $15, his target suggests huge upside potential of 155%. White explains that he arrives at this figure based on probabilities of success coupled with “the net present value of our revenue forecast through 2026.”
In total, three analysts have published recent buy ratings on TGTX.
Top Stock for 2018: LogMeIn (LOGM)
LogMeIn, Inc. (NASDAQ:LOGM) shares have ‘significant upside’ right now. Shares are trading at a steep discount of $108, down from $133 in February. So says five-star Piper Jaffray analyst Alex Zukin. He has just returned from management meetings with renewed confidence in the company’s outlook. LogMeIn’s platform already provides subscription-based remote access and admin software to two million daily users.
For Zukin, share prices are now at “compelling” levels. He sees big upside potential on the horizon due to “consistent beat and raise execution, potential for accelerating revenue growth, and a multiple re-rating in line with our peer group.”
Encouragingly, Zukin sees the company’s product and go-to-market changes paying off in 2H18 with increased bookings.
Similarly, Mizuho Securities’ Abhey Lamba chimes in, “We think mgmt. guidance remains conservative with numbers likely to be walked higher over the course of 2018. Maintain Buy rating and $145 PT.”
Over the last three months, the stock has received five consecutive buy ratings from the Street. The $139 average price target equates to 29% upside potential.
Top Stock for 2018: Delta Airlines (DAL)
Don’t be distracted about the news of a dead dog during a layover. Warren Buffett’s favorite airline stock Delta Air Lines, Inc. (NYSE:DAL) is also a killer stock pick for 2H18.
Top Imperial Capital analyst Michael Derchin believes DAL is on track to up its fiscal 2018 revenue outlook. This is due to three key catalysts: 1) strong pricing power in key domestic hubs 2) improving business yields; and 3) impressive international results. With this in mind, he etched up his price target $2 to $70 (27% upside potential). As for higher oil prices- a key concern for airlines- this hasn’t offset Derchin’s revenue bullishness (hence the price target rise).
In fact, the CEO of Delta has argued that DAL actually stands to benefit from a pricier gas position. When oil was at just $30 “it created a lot of dysfunctional behavior,” said CEO Ed Bastian. This included flooding the market with cheap tickets.
“I don’t think that fuel prices, for example, are sustainable over time in the ultra low-cost markets,” Bastian said at a conference recently. “Fuel prices have jumped 50 percent in the last year. It’s causing a big impact on their business model and something that the bigger carriers, the more premium carriers, can actually afford and can invest against to be able to get the pricing where it needs to be.”
Indeed, our data show that 100% of analysts are bullish on DAL right now. If we break this down, 8 analysts have published recent DAL buy ratings with an average price target of $74. This suggests huge upside potential of 35%.
Top Stock for 2018: Dollar General (DG)
Leading US discount retailer Dollar General Corporation (NYSE:DG) is itself trading on the cheap right now. But if you are looking to make a savvy gain this is a pullback worth buying. Top-rated Oppenheimer analyst Rupesh Parikh has just reaffirmed his top pick status on DG:
“We continue to rank DG as a top pick, and would take advantage of the pullback. As the year progresses, we believe delivery of financial guidance and potentially better sentiment toward the space could help to drive shares higher.”
He believes shares should rise 19% to $108 up from $91 currently. More specifically he still feels comfortable with management’s targeted double-digit bottom line delivery for fiscal 2019.
“This level of bottom-line growth remains a positive outlier in the space” points out Parikh. And right now the current share price has discounted this attractive bottom-line earnings potential.
In fact, the Street is modeling for even higher share growth. The average top analyst price target is $111, with both Morgan Stanley and JP Morgan aiming for shares of $116 (27% upside potential). Overall this ‘Strong Buy’ stock has received six straight buy ratings from top analysts in the last three months.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of 4,700 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.
