Just as the state of the economy appeared to be going from bad to worse, stocks headed back to positive territory. Following two consecutive days of declines on account of historically low oil prices, the broader market got a boost. On April 22, U.S. stocks ticked up as crude prices stabilized in early trading. Inspiring a further improvement of sentiment, on April 21, the U.S. government passed a $484 billion relief package for the novel coronavirus, which will provide funding for small businesses, hospitals and COVID-19 testing. Amid these unpredictable times, it’s hard to find ideal stocks to buy. After all, many questions arise.
For example, is the market’s most recent trip back to the green a signal that a recovery is imminent? It’s too soon to tell.
What we do know is that there are compelling opportunities at play, it’s just a matter of where you look for them. As for where we’re looking, we’re seeking out the advice of Wall Street pros to find the best stocks to buy now.
Using TipRanks’ database, we were able to pinpoint seven stocks backed by the analyst community:
- HCA Healthcare (NYSE:HCA)
- Restaurant Brands International (NYSE:QSR)
- GW Pharmaceuticals PLC (NASDAQ:GWPH)
- Urogen Pharma Ltd. (NASDAQ:URGN)
- eHealth (NASDAQ:EHTH)
- Cardtronics PLC (NASDAQ:CATM)
- Ameresco (NYSE:AMRC)
In fact, each has received enough Wall Street support to be given a “Strong Buy” consensus rating. It also doesn’t hurt that every ticker on our list boasts double-digit upside potential. With that said, let’s jump right in to what makes each of these key stocks to buy.
Stocks to Buy Now: HCA Healthcare (HCA)
HCA Healthcare is one of the top healthcare facility operators, with the company operating 186 hospitals and approximately 2,000 sites of care, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics, in 21 states and the United Kingdom. While it recently posted lackluster first quarter 2020 results, several analysts remain optimistic about its long-term growth prospects.
HCA reported that quarterly adjusted EBITDA and earnings per share came in at $2.2 billion and $2.33, respectively, missing the consensus estimate by a long-shot. Management attributed this result to the impact of COVID-19, which started to weigh on the company during the last two weeks of the quarter.
As a result of COVID-19, admissions growth slowed from +5% to -20% at the end of March and then -30% in April. The April impact was even more dramatic for inpatient surgeries (-50%) and outpatient surgeries (-70%).
However, Oppenheimer’s Michael Wiederhorn argues that HCA is taking steps to mitigate COVID-19’s effects on the business. “Though mgmt. remains committed to its caregivers, it has taken action to reduce corporate salaries by 10–30% and delayed certain capital projects,” he explained. The analyst added, “In addition to some of the government relief, HCA’s balance sheet has improved greatly in recent years, and HCA boasts $3.8 billion of liquidity, including its recently-issued and undrawn $2 billion resolver.”
Taking all of this into consideration, Wiederhorn stayed with the bulls. Along with his Outperform call, though, he did trim the price target from $160 to $135. However, this still leaves room for 29% upside potential.
Out of 15 total reviews published in the last three months, 100% were bullish, making HCA’s consensus rating a Strong Buy. At $153.71, the average price target exceeds Wiederhorn’s and suggests 47% upside potential. See the HCA stock analysis.
Restaurant Brands International (QSR)
Under the Restaurant Brands International umbrella, we have some of the most well-known restaurant chains including Burger King, Tim Hortons and Popeyes. Sure, COVID-19 did weigh on its Q1 2020 results, but the analyst community has several reasons to stay onboard, with any weakness presenting a buying opportunity.
Writing for Baird, analyst David Tarantino points out that QSR’s first quarter comps were actually better than expected. He adds that the company’s solid standing should enable it to overcome the headwinds it’s currently facing, with the company announcing a debt offering in an effort to enhance the flexibility of its balance sheet.
The company should also be able to perform well operationally in 2020, and when it does, investor sentiment will most likely improve. Bearing this is mind, Tarantino tells clients he is standing firmly in QSR’s corner. To this end, he left an Outperform rating as well as a $46 price target on the stock.
What does the rest of the Street have to say about QSR’s long-term growth prospects? It turns out that other analysts have also been impressed by the restaurant holding company. With 14 Buys and 3 Holds issued in the last three months, the word on the Street is that QSR is a Strong Buy. Based on the $60.81 average price target, shares could climb 34% higher in the next twelve months. See the QSR stock analysis.
GW Pharmaceuticals (GWPH)
GW Pharmaceuticals rose to fame thanks to its Epidiolex drug, which was the first cannabis plant-derived medicine ever approved by the Food and Drug Administration. The drug generated impressive sales of $296 million in 2019, its first full year of commercialization, but one analyst believes this is only the beginning.
Weighing in on GWPH for Northland Capital, analyst Carl Byrnes calls Epidiolex a “blockbuster in the making for the treatment of rare forms of epilepsy.” He argues it has been able to benefit from positive physician and patient experiences, broad access and payor support as 97% of insured patients have coverage eligibility.
With Lennox Gastaut syndrome (LGS) affecting 15,000 children and 30,000 adults and Dravet syndrome (DS) affecting 5,000 children in the U.S., there is a significant opportunity for GWPH. As a result, Byrnes sees peak U.S. sales from the LGS and DS indications landing at $750 million, with global sales exceeding $1 billion.
Expounding on the therapy’s potential, Byrnes stated, “Going forward, we anticipate EPIDIOLEX to capture material share gains as these indications are ~50% penetrated. Further, we anticipate EPIDIOLEX to receive regulatory clearance by the FDA for Tuberous Sclerosis Complex (TSC) — a rare genetic disorder that affects approximately 50K patients in the US on/about its PDUFA action date of July 31st.”
Based on the fact that Epidiolex’s E.U. launch is underway and the effects of COVID-19 should be minimal, the deal is sealed for Byrnes. To kick off his GWPH coverage, he published an Outperform rating and set a $128 price target, implying 22% upside potential.
Looking at the consensus breakdown, 13 Buys compared to no Holds or Sells mean that GWPH gets a Strong Buy from the analyst consensus. With a $183.58 average price target, shares could surge 76% in the next year. See the GWPH stock analysis.
Urogen Pharma (URGN)
Using its cutting edge RTGel platform, Urogen has been able to develop chemoablative agents for urological cancers that enable drug delivery to hard-to-reach anatomy as well as increase medication dwell time. Shares have already gained 44% in the last month, but some analysts believe its growth story is still heating up.
Much of the excitement surrounding the company is related to its recently approved Jelmyto (UGN-101) therapy, which has the potential to revolutionize the treatment of low-grade upper tract urothelial carcinoma. As the company gears up for the drug’s June 1 launch, Oppenheimer’s Leland Gershell sees big things in store.
“FDA label closely reflects the pivotal OLYMPUS dosing regimen and, together with pricing, comes in in line with expectations. URGN has infrastructure in place for a June 1 launch that will incorporate marketing strategies designed to accommodate COVID-19 restrictions. While we continue to believe Jelmyto will come to generate 2024E revenue of ~$400 million in low-grade UTUC, we are conservative on uptake through 2H20 pending specific reimbursement coding and social distancing relaxation, and we look to ~1Q21 and beyond for meaningful ramp,” Gershell commented.
On top of this, URGN’s UGN-102 candidate has already demonstrated solid results in low-grade, non-muscle-invasive bladder cancer (NMIBC). “Initial response data on UGN-102, in Phase 2 for LG non-muscle-invasive bladder cancer, supports our optimism in this indication,” Gershell noted.
Taking all of this into consideration, it’s clear why Gershell maintained an Outperform call. He also lifted the price target from $45 to $47, bringing the upside potential to 101%.
Like Gershell, the rest of the Street is optimistic. With 4 Buys and a single Hold, URGN scores a Strong Buy consensus rating. A 103% twelve-month rise could be in the cards based on the $47.50 average price target. See the URGN stock analysis.
Taking its place as one of the top private health insurance marketplaces in the U.S., eHealth provides millions of individuals, families and small businesses with tools to compare and purchase health insurance from leading insurers. With the company widely expected to escape COVID-19’s impact, it’s no wonder this stock is on Wall Street’s radar.
Every day, about 10,000 people age into the Medicare program, and according to estimates, Medicare Advantage penetration is expected to eventually increase to ~50% from ~33% currently. The implications? An expanding addressable market for EHTH.
Commenting on this, RBC Capital analyst Frank Morgan said, “As long as Americans keep turning age 65, eHealth’s addressable market grows. As these newly-Medicare eligible continue to choose Medicare Advantage over traditional FFS Medicare, eHealth’s growth potential should accelerate. And importantly, as a multi-carrier Medicare Advantage broker, eHealth has no medical underwriting risk.”
Along with its unique product offering giving it the edge over its peers, Morgan sees additional growth stemming from an improvement in per-member economics, including increased lifetime value through better retention, reduced marketing costs and lower customer care costs.
It should come as no surprise, then, that Morgan’s Outperform recommendation and $166 price target remain unchanged. This target conveys his belief that shares could see growth in the shape of 40% over the next year.
Turning now to the rest of the Street, other analysts are on the same page. The stock has only received Buy ratings in the last three months, 9 to be exact, and thus, the consensus rating is a Strong Buy. Given the $174.11 average price target, shares could gain 46% in the next twelve months. See the EHTH stock analysis.
As the world’s largest non-bank ATM operator, Cardtronics offers fully integrated ATM as well as financial kiosk products and services. While this stock hasn’t escaped COVID-19’s grasp on the market, it still counts several analysts as part of its fan base.
On April 1, the company announced that it would be suspending its guidance for 2020 and gave a more detailed description of the extent to which the pandemic has weighed on the business. While CATM was performing in line with the second half of 2019 during the first quarter into early March, things took a turn starting in mid-March. From this point, the company witnessed a drop in transaction volumes across its network, with this trend ramping up in the last week of March. Enterprise-wide decreases in transactions could continue in the second quarter of 2020.
However, Barrington’s Gary Prestopino points out that CATM’s financial standing is strong. “In 2019, CATM generated adjusted free cash flow of $150.2 million, representing a $32.3 million year-over-year increase; reduced debt by $96 million; and repurchased approximately 1.7 million shares. CATM ended the year with cash and equivalents of $30 million, long-term debt of $739 million and stockholders’ equity of $380 million,” he stated.
When it comes to its valuation, Prestopino argues “CATM represents an incredible value selling at the low end of a 15-year range on a TEV/EBITDA basis.” With this in mind, he kept both an Outperform rating and $45 price target on the stock. While this target was extended from a one year to a two-year basis, it still reflects growth of 136%.
Judging by the consensus breakdown, other analysts echo Prestopino’s sentiment. CATM’s Strong Buy consensus rating breaks down into 4 Buys and no Holds or Sells. See the CATM stock analysis.
Ameresco is one of the leading players in the renewable energy space, offering ESPC-funded energy solutions for public and private organizations. Despite the fact that shares have experienced some recent weakness, one analyst thinks its business model will ultimately be durable and positively levered to secular growth trends.
Representing Oppenheimer, analyst Noah Kaye points out that AMRC’s technology has grown beyond energy efficiency to include distributed generation (solar, CHP), battery storage and microgrids, and in turn, its addressable market has expanded from $8 billion to $25 billion. Additionally, the company is witnessing significant growth in microgrid project flow from resiliency-focused entities and expansion of scope from clients focused on carbon footprint reduction.
On top of this, Kaye thinks lower interest rates should help drive additional returns for energy assets and support larger ESPC projects. It also has good visibility for full year 2020, with COVID-19 not impacting operations and contracting velocity so far.
Further explaining his bullish thesis, Kaye wrote, “With a robust backlog and energy asset pipeline, AMRC’s mulit-year revenue outlook seems highly favorable and visible compared to that of our overall coverage. Accordingly, we view the shares as an attractive investment opportunity, with solid earnings growth potential likely to remain over the next few years at least.”
As a result, Kaye reiterated an Outperform rating and $26 price target. Should this target be met, a twelve-month gain of 52% could be in store.
Meanwhile, the rest of the Street is also singing AMRC’s praises. It has received only positive feedback in the form of 4 Buy ratings, so the consensus rating is a Strong Buy. Given the $27.75 average price target, shares could jump 62% in the next year. See the AMRC stock analysis.
TipRanks offers investors the latest insight into eight different sectors by tracking the activity of over 5,000 Wall Street analysts. As of this writing, Maya Sasson did not hold a position in any of the aforementioned securities.