Every investor wants to buy a stock that is ready for growth. The trick to successful investing is to find those stocks. What makes this difficult is the truth of the old market cliché that past performance is no guarantee of future returns.
Past performance may not guarantee a bright future, but it is the data set that investors have available, and it is natural to consult it. And when stocks show a record of strong gains, sustained over an extended period of time, it’s a signal investors should take seriously.
So how do you build a growth portfolio, one that stays on the path of high returns? One place to start is with Wall Street’s analysts, the professional stock experts who regularly scan the market. A retail investor looking for a growth profile may look for stocks with Strong Buy ratings coupled with solid upside potential.
Using The TipRanks database, we looked up three stocks whose characteristics start there. These are also all hovering at or near their 52-week highs — and now we can find out what else makes them worth another look.
PDS Biotechnology (PDSB)
We start with PDS Biotechnology, a clinical-stage biotech company working in immuno-oncology, a leading field in cancer research. IBS focuses on stimulating the immune system to produce greater numbers of T cells, the active cells that attack disease-causing agents in the body; the company’s goal is to develop an overwhelming attack that will strike tumors with more force than they can withstand. PDS uses its proprietary Versamune platform to develop disease-specific antigens with applications in both cancer immunotherapy treatments and infectious diseases.
The company’s most advanced drug candidate, PDS0101, is currently undergoing several separate trials as a treatment for various diseases. In a phase 2 study led by the National Cancer Institute, PDS0101 was examined in patients with HPV16-positive cancers, who had relapsed because chemotherapy treatments had failed. The drug was shown to reduce tumors in 5 of 6 patients and in 7 of 12 who had also failed treatment with checkpoint inhibitors. The results are considered positive and further tests are planned.
Good clinical trial results always help a biotech company, and PDS stock is up 597% so far this year.
analyst Louise Chen, with Cantor Fitzgerald, likes what she sees in PDS0101, especially the multiple simultaneous trials of the drug, giving it several simultaneous shots on target.
“We believe that the maximum sales potential of PDSB’s pipeline is undervalued. Therefore, upward earnings revisions, driven by pipeline improvements, should drive the stock higher in our view. Possible catalysts include: 1) Phase (Ph) 2 trial of PDS0101 + Keytruda for 1L treatment of HPV-associated metastatic/recurrent head and neck cancer, data 4Q21/1Q22, 2) Ph 2, investigator initiated clinical trial evaluating PDS0101 + chemoradiation in patients with advanced cervical cancer, data 1H22, 3) Completion of enrollment in NCI (National Cancer Institute) HPV-associated cancer trial 1Q22,” Chen noted.
In line with her optimistic outlook, Chen rates this stock as Overweight (ie buy), and her price target of $25 implies a 67% gain for one year. (To view Chen’s track record, click here)
Wall Street agrees with the potential here; this is evident from the unanimous Strong Buy consensus rating based on 7 recent positive reviews. The stock is priced at $14.95 and their average price target of $19.67 gives them a ~32% increase over the next year. (See PDSB stock analysis on TipRanks)
Tenet Healthcare (THC)
Subsequently, Tenet Healthcare is based in Dallas, Texas. This multinational investor-owned healthcare company operates 60 hospitals and more than 460 outpatient clinics and other facilities through its network of subsidiaries, and conducts more than 8.6 million patient contacts annually through partnerships with more than 50 health systems. In short, this is one of the major players in the patient-centered segment of the healthcare industry.
Like much of the economy, Tenet saw a decline in revenues from the second quarter last year, but unlike the general economy, Tenet’s losses were minor. Even with the coronavirus pandemic, Tenet was able to record total revenues of $17.65 billion last year.
The strong performance continues this year. In 2Q21, Tenet exceeded market expectations for both earnings and revenue. EPS came in at $1.10 compared to the $1.07 estimate — and it was well above the 83 cents reported in last year’s quarter. Revenue of $4.95 billion rose 3.5% sequentially, but a more impressive 35% year-over-year.
Solid financials helped push the stock over the top, and THC stocks have gained a robust 167% over the past 12 months.
5 star analyst John Ransom Raymond James has been impressed with Tenet’s ability to recover from corona – especially with the company’s return to regular hospital operations.
“… performance was strong in all segments, management emphasized that Hospital adj. EBITDA growth remains higher in states with more progressive reopening plans and sees this as a tailwind in the 2H. USPI volumes are back at 100% of pre-pandemic levels with hospital surgery and outpatient visits at 96% and 95% respectively… we continue to find equities attractive and see the faster-than-expected recovery in volumes coupled with the expansion of faster procedures that boost 2H performance,” Ransom said.
Ransom uses these comments to back up its Outperform (ie Buy) rating, and its $100 price target indicates it has room for 33% growth this year. (To view Ransom’s track record, click here)
There are no less than 13 recent ratings on this stock, and they fall in 10 to 3 in favor of Buy over Hold – all with a Strong Buy consensus rating. THC stocks are priced at $75.26, and their average target of $83.62 implies an increase of about 11% from that level. (View THC Stock Analysis on TipRanks)
nVent Electric (N/A)
The last growth stock we look at is nVent Electric, a contracting company that provides a wide variety of electrical system products. From wiring and grounding to cabinets and packaging, to cooling and heating, to housings, fasteners and support – when electrical systems need it, nVent delivers. The company’s products can be found in a variety of industries, from concrete and construction to data centers and rail transportation. nVent had sales of $1,998 billion last year despite the pandemic crisis.
nVent has been working on expansion through partnerships and acquisitions and has forged several combinations in recent months. In early July, the company acquired CIS Global, a supplier of intelligent rack power distribution and server sliding products. This product line expanded the quality of nVent’s own products, especially in the field of heat and energy management of electrical systems.
In mid-August, nVent entered into a strategic alliance with Power Resources International, in which the companies will work together to provide rail and switch heating solutions to the transit industry in North America. The move is based on the continued strength of North American freight rail systems, which remain the primary form of long-haul transportation for bulk products in the US and Canada.
In 2Q21, nVent reported revenue of $601.3 million, the highest figure in the past two years. All segments outperformed last year’s quarter and sales as a whole were up 34%. Earnings per share came in at 39 cents, for a 160% year-over-year gain.
All this – the healthy financial numbers and active expansion – has resulted in a share price that continues to grow. N/A is up 88% in the past 12 months.
Wolfe analyst Nigel Coe believes the stock has more room to grow. Coe rates N/A as an outperform (i.e., buy) along with a price target of $43, which represents an upward trend of approximately 23% for the coming year. (To view Coe’s track record, click here)
Coe supports his view, writing: “nVent delivered a solid second quarter performance, beating our estimates across the board. The lead was Enclosures, which shone in both organic sales growth (+31.2% yoy) and margin expansion (+500 bps). Y/Y)…”
The analyst added: “NA is one of the few true value stocks left in EE/MI and we see room for relative multiple expansion as the sector valuation dispersion narrows with IP acceleration. N/A is trading at a large discount to of history and we think it’s too cheap in relation to the quality.”
Overall, NVT stocks have a unanimous Strong Buy analyst consensus rating, a vote of confidence from the Wall Street analyst corps. The stock is selling for $34.88 and the average price target of $41.83 implies ~20% growth in the coming year. (View N/A stock analysis on TipRanks)
To find great ideas for trading growth stocks at attractive valuations, visit TipRanks’ Best stocks to buy, a newly launched tool that unites all of TipRanks’ stock insights.
Disclaimer: The opinions expressed in this article are those of the recommended analysts only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.