[Editor’s Note: This article was previously published in December 2018 but has been updated to reflect new information. Each of the picks remains the same, as we believe they can still provide significant upside to come.]
As we head deeper into 2019, here are some of the best smart money stocks to buy. 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 what remains of 2018!
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 nearly $250 billion this year. And over the last three months, UNH has received 16 back-to-back buy ratings from analysts.
No sell ratings here …
One of these analysts is Jefferies’ David Windley. He is ranked a very impressive No. 14 out of 4,669 analysts ranked by TipRanks. Windley reiterated his UNH buy rating three months ago with a $315 price target (17.9% 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.
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 five back-to-back buy ratings from analysts in the last three months. These analysts are predicting huge upside for the stock of more than 100% in the next 12 months.
For example, four-star Northland Securities analyst Carl Byrnes reiterated coverage of the stock with a bullish $55 price target. This works out at a whopping 115% upside from the current share price. Similarly, top Needham analyst Serge Belanger also started to cover the stock last month with a $66 price target (154% 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 have soared following Food and Drug Administration approval of Heron’s CINV treatment Sustol.
CBS Corp (CBS)
He recently reiterated his “buy” rating on CBS Corporation (NYSE:CBS) with a $72 price target (44% upside). According to Goss, 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.
Overall, CBS has received nine recent buy ratings and five hold ratings. But it is the average analyst price target on CBS of $66.50 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 $90 from top Benchmark analyst Daniel Kernos.
Chinese e-commerce giant Alibaba (NYSE:BABA) hasn’t peformed well over the past year. BABA, which now has a market cap hovering around $400 billion, could find rejuvenated growth 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 18 straight buy ratings indicating a bright future for this fast-growing stock. These analysts predict that BABA can reach $198.57 in the next 12 months (26.4% upside from the current share price).
Goldman Sachs analyst Piyush Mubayi came out with BABA’s highest price target yet of $247 (57% upside potential). Mubayi is a top analyst to trust with a 60% success rate and 11.2% return across his BABA ratings.
Software giant Adobe Systems Incorporated (NASDAQ:ADBE) is the creator of well-known applications, including Photoshop and Acrobat Reader.
In the last couple of months, Adobe has received multiple buy ratings from top analysts despite share price volatility. Indeed, top Piper Jaffray analyst Alex Zukin recommends buying ADBE. He reiterated his buy rating recently with a $310 price target (30% upside). For investors still sitting on the fence, note that Zukin has an impressive track record with his ADBE recommendations with a 72% success rate and 22.5% 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.”
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 past month, 13 analysts have rated MU a buy. These analysts are predicting that in the next 12 months, Micron will reach $49.05 — a 31% upside from the current share price.
Five-star Wells Fargo analyst Aaron Rakers believes the stock can climb by 33% in the next year. Gill set his price target at $50 recently.
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 $163 price target on the stock — suggesting upside of nearly 40%. This falls much higher that the $146.25 average analyst price target, which is still 25% above the current share price. In the last three months, 14 analysts published buy ratings on the stock versus four holds.
Alexion Pharmaceuticals (ALXN)
Global biopharma Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has spiked this year from $98 to $119 … 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 $165 — close to 40% upside from the current share price. In the last three months, 8 out of 9 analysts have recorded a bullish sentiment on ALXN.
Take, for example, top Piper Jaffray analyst Christopher Raymond. He reiterated his ALXN buy rating with a $180 price target (50%-plus upside potential).
Several analysts believe 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).
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 12 buy ratings in the past three months. And crucially, the stock still has big upside potential of almost 25% from the current share price of $85.85.
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 2017, causing shares to soar over 20%. Importantly, the drug has no black-box suicide ideation warning and it is competitively priced. As a result, Stifel Nicolaus’ Paul Matteis has a $115 price target on NBIX.
Applied Materials (AMAT)
Applied Materials, Inc. (NASDAQ:AMAT) is buzzing right now. This semiconductor capital equipment maker soared following a very bullish report from top JP Morgan analyst Harlan Sur. He reiterated his “buy” rating on the stock with a price target of $54. 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 15% year-to-date, has 11 buy ratings from analysts in the past three months, including from top-ranked analysts at Needham and RBC Capital.
The $47.40 average analyst price target now works out at 24% 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.