When a market has stayed in bull market form for almost eight years, momentum investors and traders start to ask themselves, where do I look for alpha now? The question, as perplexing as it seems, may not be that hard to answer. Often the answer lies in hot companies with solid franchises that may have either sold off or leveled off and are offering investors timely entry points.

Chasing stocks in an overbought market is dangerous. With that in mind, overbought markets can go higher. We screened the Merrill Lynch research database, and found four companies rated Buy that all have huge upside to the analysts targets. They are much more suited for very aggressive accounts with a higher risk tolerance.

Acacia Communications

This company had a red-hot IPO and has backed up sharply since a recent secondary offer. Acacia Communications Inc. (NASDAQ: ACIA) is a leading supplier of high-speed coherent optical interconnect products to network equipment manufacturers, hyperscale cloud companies and service providers. The company’s foundation is in its Digital Signal Processing (DSP) and a unique approach with its silicon-based photonic integrated circuit (SiPhi PIC). The company primarily combines the DSP and PIC to create modules, which are integrated into optical/networking equipment to provide high-speed optical interconnect.

Top Wall Street analysts have increased estimates following Acacia’s positive preannouncements, and while some were underwhelmed by fourth-quarter guidance, the company is adding new customers and demand is strong, with little competition. In addition, analysts expect that Facebook will be using Acacia’s AC400 transponder module with 400G dual-channel coherent digital signal processing application specific integrated circuit.

Acacia continues to benefit from strong demand across Web 2.0 direct customers, Chinese original equipment manufacturers and metro 100G cycles. Acacia additionally is benefiting from strength in China broadband optical roll-outs.

This is also a top small cap play at other firms we cover as the company is levered to double-digit growth trends in 100G+, which will be scaling to a terabit in fiscal 2018. Also big for the company is optical roll-outs at hyper-scale cloud and service providers.

The Merrill Lynch price target for the stock is $105, and the Wall Street consensus target is higher at $112.50. The shares closed most recently at $59.50. There is 76% upside to the Merrill Lynch price target.

Amazon

This is the absolute leader in online retail and a dominate player in cloud storage business. Amazon.com Inc. (NASDAQ: AMZN) is the one of the world’s largest online retailers, with a global brand and country specific sites in the United States, United Kingdom, Germany, France, Japan, Canada, China, Spain, Italy, Mexico and India. Amazon also owns several other online retailers and online properties, including Zappos.com, Diapers.com, Woot, Twitch and others.

In addition, Amazon also operates Amazon Web Services (AWS), a leading cloud-based computing platform for developers and enterprises. AWS is the undisputed leader in the cloud now, and many top analysts team see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market. The company has had numerous recent product announcements, including Aurora for relational database engine, Quick Sight for business intelligence and AWS Database Migration Support Service.

Amazon reported a mixed quarter in October, and top analysts around Wall Street noted that revenues were in line and margins were soft. Guidance was below expectations as the company continues to invest, but the sales midpoint was also below expectations. The stock sold off then but has rallied back sharply.

The $1,125 Merrill Lynch price target compares with the consensus target price of $928.53. The shares closed most recently at $799.02. There is a whopping 42% upside to the Merrill Lynch target.

Regeneron Pharmaceuticals

This stock remains one of the favorites among portfolio managers and is one of the top Merrill Lynch picks for 2017. Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) has been a performance monster over the past two years, and most Wall Street firms expect it to stay one. The company is focused on the development of therapeutic human antibodies for the treatment of eye disorders, hypercholesterolemia, cancer, inflammation and other diseases.

Regeneron’s product sales are driven principally by its VEGF inhibitor Eylea, which is approved for use in wet age-related macular degeneration and diabetic macular edema, and by Praluent for the treatment of hypercholesterolemia.

The company most recently reported a better-than-expected quarterly profit, as U.S. sales of its flagship eye drug Eylea rose 27%. Eylea generated U.S. sales of $831 million in the quarter, topping the consensus estimate of $812 million. Sales are expected to continue a solid upward trend.

The Merrill Lynch price target is a massive $502, and the consensus target is listed at $435.82. Shares closed on Wednesday at $364.47. The upside to the price target at Merrill Lynch is 40%.

SecureWorks

This smaller cap company had a 2016 initial public offering and could potentially explode for investors this year. SecureWorks Corp. (NASDAQ: SCWX) is a security services carve-out of Dell that offers its global customers security services, outsourcing and consulting. The company is a leader in the $8.7 billion managed security services market, and it also addresses the broader IT security outsourcing and consulting markets.

The company combines its proprietary software platform, the Counter Threat Platform (CTP), with its internal security experts to remotely monitor and manage customer-owned security appliances.

The analysts noted this when the company reported last month:

SecureWorks reported third quarter results better than expected; guidance was in-line but some revenue/customer metrics are lackluster. Margin improvement and consistent performance likely overshadowed by decelerating revenue and customer growth. We believe the company remains positioned to expand further into larger enterprises and internationally.

Merrill Lynch has a $17 price target, and the consensus target is $15.55. The shares closed yesterday at $10.34. The upside to the analyst price target is 65%.

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These stocks hold the proverbial big risk, big reward handle. Given the heights of the current market, it may be wise to scale in some capital, and see how earnings and the rest of the month go.

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