General Grant understood that momentum counts in life. He probably wouldn’t have phrased it that way, but his campaigns showed – he always went ahead and used every event to achieve his long-term goals. He created momentum and put it at the service of his army.
Market investors can tap into that same combative attachment to momentum. Find a stock that has done well and whose fundamentals are strong, and stick with it – that’s the essence of momentum investing. It goes against the old cautionary adage that past performance is no guarantee of future returns, but as Grant could tell you, you won’t succeed if you keep deviating.
With this in mind we used The TipRanks database to look up two stocks that have seen their share price rise to recent record highs. And best of all, some analysts believe the stock still has a long way to go, while both have received overwhelmingly bullish praise from the streets, enough to garner a “Strong Buy” analyst consensus. Let’s take a closer look at that.
Jones Lang Lasalle, Inc. (JLL)
Jones Lang Lasalle, based in Chicago, is a global real estate and investment management firm that offers a range of services to high net worth clients. Services include broker rental, finance, project and property management, tenant representation, appraisals and more. The client base includes institutional and private investors, corporate clients and the very wealthy. This is a high-end company that tailors real estate services to a wealthy clientele.
JLL benefits from a clientele that has both wealth to spend and a need for professional management of it, regardless of the overarching economic conditions. This basic fact underlies the company’s revenue performance over the past two years, including the COVID crisis and recession. JLL’s quarterly revenue for the last 9 quarters has remained between $3.7 billion and $5.4 billion, with a pattern of relative lows in the first quarter gradually building up to relative highs in the fourth quarter. EPS has shown a similar pattern, albeit with more ‘noise’ in the data.
The company’s operations generate significant cash, and in 2020, JLL saw a record $1.11 billion in cash from operating activities. This was a 131% increase from 2019 and made even more impressive by coming through during the COVID year. The company posted strong cash collections on its receivables during the year. In 2020, corporate debt has also decreased significantly, from $670 million at the end of 2019 to $192 million at the end of December 2020.
With such a solid financial footing, it’s not surprising that JLL has also seen strong stock price momentum. The stock is up 124% in the past 12 months and up 50% since the turn of the year – well above the 17% returns the S&P 500 achieved.
For JLL for Wolfe Research, Andrew Rosivach is impressed by the recent growth and likely outlook. He begins his coverage with an Outperform (ie Buy) rating, and his price target of $332 implies a 49% increase for one year.
Supporting his position, Rosivach writes: “We assume that the cyclical growth of transaction-based businesses (ie leasing and capital markets) will lead to excessive earnings growth in the short term. If volumes do not recover at the pace we expect, earnings growth may not be as substantial. However, given the tight credit markets, the current conditions are favorable for growth, especially in the capital markets. (To see Rosivach’s track record, click here.)
Wall Street is clearly bullish here and Strong Buy’s consensus rating is based on 4 positive ratings. The shares are priced at $222.57; their average price target of $248 suggests room for 11% upside potential over the next 12 months. (Check out JLL’s stock analysis on TipRanks.)
Arvinas Holding Company (ARVN)
The second stock we’ll look at, Arvinas, is a clinical-stage biopharmaceutical company developing therapeutics for protein degradation. This is a fascinating field and a new class of drugs tailored to target specific disease-related proteins. Proteins are present in all biological reactions at the cellular level, and the human body has natural processes for removing denatured proteins; Arvinas’ technique is to use those protein removal systems to cause degradation and breakdown of disease-causing protein molecules. The company has its own development platform, PROTAC, to develop proteolysis targeting chimeras.
In the past year, Arvinas has seen its shares rise twice, once in December and once in July. The December spike coincided with news that ARV-110 and ARV-471, the company’s most advanced drug candidates, had both shown positive results in early testing, the former as a treatment for prostate cancer and the latter as a breast cancer therapy. Both drugs showed acceptable safety and tolerability profiles, along with evidence of efficacy in antitumor activity. Both candidates are now undergoing Phase 2 examinations.
In July, the company announced additional positive news about ARV-417. Arvinas announced it will partner with Pfizer in a global partnership to commercialize ARV-417. The agreement provides that Pfizer will make a $650 million cash upfront payment to Arvinas, with an additional $350 million separate investment in the company.
Due to these positive developments, the shares have risen by as much as 212% in the past 12 months. Not only have they sparked investor interest in ARVN, they’ve also prompted Wall Street analysts to take note. From HC Wainwright, 5-Star Analyst Andrew Fein writes: “The main takeaway of the [Pfizer] deal, in our view, is the potential of ARV-471 in combination therapy with Pfizer’s CDK4/6 inhibitor…. not only does the collaboration validate ARV471 but it also stimulates other degradation programs in the TPD (targeted protein degradation) landscape. Therefore, if we view ER degraders as still a brand new approach in the oncology space, we remain cautiously optimistic about the prospect of ARV-471 and ARV-110 as we move towards 2H21.”
Unsurprisingly, Fein reiterated a buy recommendation for this stock and raised its price target from $100 to $135, representing a 12-month increase of 33% for the stock. (To view Fein’s track record, click here.)
This company’s headline grabbers caught the attention of 9 analysts. Their aggregate ratings are unanimous to buy the stock, giving ARVN stock a Strong Buy consensus rating. The stock is selling for $101.1 and the average price target of $126.44 suggests there is room for an additional 25% share valuation in the coming year. (Check out Arvinas’ stock analysis on TipRanks.)
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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.