The Credit Suisse report notes that while under-followed stocks over the past 20 years have generated commensurate returns to their over-followed counterparts, the firm’s careful screening process may help to pick attractive companies for investors. We screened the Credit Suisse selections for companies that were more well-known in general.
Diamond Resorts International Inc. (NYSE: DRII) had a big secondary offering this week and it leads off the Credit Suisse list. The company manages vacation ownership resorts and sells vacation ownership points that provide members and owners with Vacations for Life at over 330 managed and affiliated properties and cruise itineraries. The vacation destinations are located in 34 countries throughout the continental United States, Hawaii, Canada, Mexico, the Caribbean, South America, Central America, Europe, Asia, Australasia and Africa. The company will host an investor day next week.
The Thomson/First Call consensus price target for the stock is $41.40. Shares closed Thursday at $33.60.
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Merit Medical Systems Inc. (NASDAQ: MMSI) posted outstanding fourth-quarter earnings and sales topped Wall Street estimates. It is a leading manufacturer and marketer of proprietary disposable medical devices used in interventional and diagnostic procedures, particularly in cardiology, radiology and endoscopy. It also recently held its first investor day, at which management presented the company’s three-year plan for revenue and growth, provided facility tours and discussed the product pipeline. A medical device company as big as Medtronic interested in the product line could be a possible suitor.
The consensus price target is posted at $20.50, while the stock closed up Thursday at $19.50.
PDL BioPharna Inc. (NASDAQ: PDLI) manages a portfolio of patents and royalty assets, including license agreements with various biotechnology and pharmaceutical companies. To acquire new income-generating assets, PDL provides non-dilutive growth capital and financing solutions to late-stage public and private health care companies and offers immediate financial monetization of royalty streams to companies, academic institutions and inventors. The company pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases, for which it receives significant royalty revenue.
The consensus price target for the stock is $7.50. It closed trading on Thursday at $7.10 a share.
Surgical Care Affiliates Inc. (NASDAQ: SCAI) had a top health care initial public offering in 2013, and the stock has moved steadily higher since selling off last fall. The company has benefited and will likely continue to do so from the current trend toward cost cutting in medical practices. The firm’s ambulatory surgery centers are a much less costly alternative to in-house surgery departments for many medical organizations.
The consensus price target is currently at $37.38. Surgical Care shares closed Thursday at $32.85.
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On average, only three or four analysts cover these stocks. Sometimes popular, well-known stocks can 20 or more companies providing coverage. Screening well at Credit Suisse, these under-followed gems may bring a sparkle to an aggressive growth portfolio with higher risk tolerance.
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