We are well into the second half of 2021 and with a bit of luck we will soon completely banish last year's big headwinds to the rear-view mirror. Nevertheless, the current conditions are favorable for the equity markets. The indices are up – the index is up 20% this year and the index is up more than 15% – and there is an optimistic mood. With the Fed sticking to its low-rate policy, at least for the short term, equities are the place to look for yield.
This kind of mood can be self-perpetuating and can create the conditions that further share the price increase. In short, it is an ideal environment for growth stocks.
We all know that past performance is no guarantee, but it can be an indicator, especially consistent long-term performance. But that's only part of the growth stock picture. Investors should also look to Wall Street's opinion – are the stock's analysts impressed? And besides, what does the upside potential look like?
Now we have a useful profile for growth stocks: solid gains, buy ratings from the Wall Street analyst corps and a significant increase for the coming year. Three stocks in the Investing Insights platform are already signaling those signs of strong forward growth. We even found out that all three of them are a 'Perfect 10' smart score score. Let's take a closer look.
Celldex Therapeutics (CLDX )
We start in healthcare, where Celldex Therapeutics (NASDAQ:) is a clinical-stage pharmaceutical company working on novel, targeted therapeutic drugs to address serious, even devastating diseases where current treatment regimens are simply ineffective. The company's pipeline is split into several tracks, including inflammatory, oncology, and bispecific inflammatory and/or oncology pathways. Celldex works with monoclonal and bispecific antibodies, using antibody-based therapeutic modes to trigger natural immune responses, and involves the immune system in the treatment process. Targeted diseases include pancreatic cancer and chronic spontaneous urticaria.
That can all be a mouthful, the result is that this company has lined up multiple shots on target – as well as had recent positive trial results.
The most recent data reported last July, when the company's drug candidate CDX-0159 showed significant positive results in a Phase 1b study for efficacy against chronic inducible urticaria, a skin condition commonly associated with painful hives . Of the 19 patients in the study, 95% had a complete response and the remaining 5% had a partial response. The drug was well tolerated, with only mild side effects. The company is currently enrolling in an additional phase 1b study, involving up to 40 patients, and hopes to have results by early summer next year. The company's CDX-1140 program is also progressing through Phase 1 trials. Celldex expects results from this program in metastatic solid tumors and B-cell lymphomas by the end of this year.
The result: a stock price that has risen more than 340% in the past 12 months. Cantor analyst Kristen Kluska is among those who say there is more room for growth.
"With the increase in stock [340%] over the past 12 months, there has been a lot of attention for the name, mainly thanks to the positive data sets reported by CDX-0159. We believe that in the coming 12 months are multiple tipping points that could provide additional context around the potential of CDX-0159, along with updates to Celldex's oncology portfolio," Kluska wrote.
The analyst added: "We spoke with multiple investors based on this data and believe the findings strengthen the case that mast cells play a key role in chronic urticaria and the robustness of CDX-0159, based on the potent reactions , that exceeded expectations.”
In line with her optimistic comments, Kluska rates CLDX as overweight (i.e., buy) next to a $61 price target. This figure suggests room for future growth of 21%.
Wall Street generally agrees with Cantor's view here. Celldex has 4 recent reviews and they are all positive, making Strong Buy's consensus rating unanimous. The shares are selling for $50.28 and their average price target of $62.25 implies an increase of about 24% for one year. (See CLDX Inventory Analysis)
Beyond Air, Inc. (XAIR)
The next step is Beyond Air (NASDAQ:), another clinical-stage biotech company. Beyond Air focuses on lung diseases and the use of medical-grade nitrous oxide (NO) as a basis for treatment. NO is hardly an exotic compound; it's an ordinary gas made of nitrogen and oxygen, the two largest components of the air around us. Beyond Air's program focuses on using NO to treat lung infections, pulmonary hypertension, and even solid tumor cancers.
The company's pipeline is based on delivery systems to deliver NO directly into the patient's lungs. The gas is derived from ordinary air and the system can deliver doses up to 400 ppm, and can deliver it continuously or for a set time. The company's LungFit System is currently under FDA premarket approval (PMA) for the treatment of persistent pulmonary hypertension in neonates, and a commercial launch is planned for the fourth quarter of this year.
In addition, Beyond Air expects two more milestones this year. The interim results of the LungFit GO Nontuberculous Mycobacteria (NTM) lung infection home pilot study are expected in the fall of this year, and the company's solid tumor program is expected to be approved by regulatory authorities by the end of the year. approved for human trials.
With so many catalytic converters on the way and early testing promising, the stock has gained an impressive 98% so far this year. But would you believe it could rise another 65%? Matthew Kaplan van Ladenburg does. The analyst rates XAIR as a buy, along with a price target of $17.
“We remain confident that Beyond Air has set itself up to execute on its commercial launch and label expansion timeline. We believe the upcoming milestones can serve as important potential catalysts for the stock,” noted Kaplan.
XAIR has a unanimous analyst consensus rating for Strong Buy, showing that Kaplan's opinion is not an outlier. That consensus is based on 5 recent reviews of the stock. The stock's average price target is $12.54, which represents an increase of ~21% from its current trading price of $10.43. (See XAIR inventory analysis)
City office REIT (CIO )
Let's close with a REIT, a real estate investment trust. These companies exist to buy, own, manage and lease all types of real estate, both residential and commercial. In addition, they are also often heavy investors in mortgage-backed securities.
City Office (NYSE:) is a US-based company, with most of its operations in major metropolitan areas in the West and Southeast. The company's portfolio includes more than 5 million square feet of rentable space and has prime addresses in high-growth cities such as Dallas, Denver, Phoenix, Tampa and Orlando.
The big recent catalyst for City Office came this month, when the company struck a deal on August 20 to sell its Sorrento Mesa office properties in San Diego. The deal is valued at at least $576 million, and the company will realize the money in separate tranches — a $395 million payment before the end of the year, and another $181 million by February 2023.
There are two main points in this deal for the city office. First, the company bought the buildings in question in 2017 for just $116 million. The added value is therefore impressive. And second, at the end of the second quarter of this year, City Office had just $13 million in cash against more than $612 million in long-term debt. The proceeds of this sale will cover most of that debt.
So it's no wonder the CIO spiked 24% on sales news. That gain was part of the stock's total gains of 104% over the past 12 months.
Craig Kucera, 5-star analyst at B. Riley, agrees that sales are the main driver here, noting:
"CIO… had entered into agreements to sell all of its assets in its Sorrento Mesa submarket (life science office buildings and land) for $546 million (net), significantly more than the $278 million value we attributed to the land-heavy assets in our previous NAV estimate… The CIO may accelerate sales depending on its ability to realign net proceeds from asset sales CIO is likely to generate significant earnings growth through capital from the Sorrento Mesa -Recycle sales in 2022 to other office asset acquisitions…”
Kucera gives CIO stocks a price target of $22 along with a buy rating. At the current level, its target implies an increase of ~35%.
This is another Strong Buy stock, although the analyst consensus is not unanimous. It's more like a 3 to 1 split of Buys over Holds. The share price is $16.23 while the average target price is $17.50. (See CIO Stock Analysis)
For more ideas for stock trading at attractive valuations, visit Investing Insights.
