Portfolio managers and others in charge of investments are facing the first down year in the markets since 2008. What can be even worse for active managers is trailing your benchmark. For example, if your benchmark is the S&P 500, it was down 6.56% for the year at the end of last week. If you are down, say, 9%, then you are trailing the benchmark.

In a new report, SunTrust Robinson Humphrey combed through the its analysts and coverage universe to come up with 26 stocks to Buy that are designed to help clients “catch up” to their benchmarks. The stocks that made the cut are part of a compelling list of lagging stocks rated Buy that could outperform the overall market this quarter.

We chose four that look like they do indeed have solid upside potential.

American Electric Power

American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. American Electric also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

ALSO READ: Top Stocks to Buy Now for Big Potential Q4 Rally

Many on Wall Street feel that the stock trades at a discount to its utility peers, and they feel it deserves a premium. They also think the company will sell generating assets and buy back shares with the proceeds, which will be accretive.

American Electric Power shareholders are paid a solid 3.8% dividend. The SunTrust price target for the stock is $61. The Thomson/First Call consensus target is $60.87. Shares closed on Wednesday at $56.04.

Cempra

This is another stock the buy side loves that has massive upside potential. Cempra Inc. (NASDAQ: CEMP) is a clinical-stage pharmaceutical company focused on developing antibiotics to meet critical medical needs in the treatment of bacterial infectious diseases.

Many analysts feel that Cempra is a very positive story, as many other players have left the antibiotic market. Solithromycin is the company’s potent fourth generation macrolide antibiotic. The oral data in Phase 3 released last January and was very positive. Its polymorph patent extends to 2032, which is significant. With other drugs also well along in clinicals, the company may be a target for a bigger biotech.

The Solithromycin Phase 3 SOLITAIRE-IV data is due by December. Not only could that be huge, but positive data could get a quick FDA approval as there is such a desperate need. It also could get big pharmaceutical companies thinking about a bid for the company.

SunTrust has a price target of $58, but the consensus target is lower at $49.30. The shares closed on Wednesday at $29.11.

NXP Semiconductors

This company is considered a top play for investors looking for a chip stock with Internet of Things exposure. NXP Semiconductors N.V.’s (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analyst believe the merger can transform the company into a powerhouse. The merger made NXP the fourth largest semiconductor company in the industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

ALSO READ: Merrill Lynch Gets Nervous: Buy Only High-Quality Stocks Now

NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers. With a diversified product base, the stock remains a solid buy, albeit a touch pricey compared to others.

The SunTrust price target is $140, and the consensus target is $120.33. The stock closed Wednesday at $84.94.

Shire

This is a top pick on Wall Street in specialty pharmaceuticals. Shire PLC (NASDAQ: SHPG) develops, licenses, manufactures, markets, distributes and sells pharmaceutical products. It offers various products for the treatment of attention deficit hyperactivity disorder. The company also focuses on the development of resources projects in various therapeutic areas, including rare diseases, neuroscience, ophthalmics, hematology and gastrointestinal disorders, as well as early development projects primarily on rare diseases.

Many analysts were perplexed by the somewhat mixed market reaction to the Baxalta bid, and the market correction provided investors a compelling opportunity to refocus on company’s true intrinsic value. Shire publicly placed its bid for Baxalta on August 4, and Baxalta initially said the bid was to low and recent reports indicate Shire is looking to sweeten the offer.

The Baxalta acquisition could produce $13 billion in revenues for Shire’s rare disease portfolio by 2020, according Bloomberg Intelligence analysis. Sales at the combined entity are projected to reach $20 billion. In addition, the upcoming Lifitegrast PDUFA on October 25, which was granted a priority review by the FDA is an important catalyst for Shire on a standalone basis and for the Baxalta bid prospects.

The SunTrust price target is $298, and the consensus target is $283.91. The stock closed Wednesday at $201.88.

ALSO READ: 3 Top Jefferies Hidden Value Stocks to Buy Now

While these companies are not suitable for all investors’ portfolios, they have outstanding upside potential and far less downside than high-flying momentum stocks. Plus, they could very well help investors “catch up” in their own portfolios.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.