Investing

5 New Raymond James Analysts Favorite Stock Picks With Massive Upside Potential

Lee Jackson

Published: November 13, 2019 7:15 am

Last Updated: January 30, 2020 1:14 pm

For the first time in many years, many active managers are outperforming index funds in 2019, and that should be a loud wake-up call to passive investors. After more than a 10-year bull market, the bull is tired. Although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial “stock-pickers” market.

With that being the case, and with many portfolio managers and investors looking for stocks that can outperform into year’s end and generate a little finish-line alpha, the analysts at Raymond James are all asked to submit their favorite stock pick. Analysts may only have one “buy” idea from their stocks under coverage rated Strong Buy or Outperform on the list at any given time.

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We screened the list looking for some new companies with the biggest upside to the Raymond James price target, and found five that look like solid picks for the fourth quarter and into 2020. All these favorite picks are rated Strong Buy.

Alibaba

This continues to be among the most bought tech stocks on Wall Street, as well as one of the most valuable brands in the world. Alibaba Group Holding Ltd. (NYSE: BABA) runs the largest retail marketplaces (Taobao, TMall) and leading B2B sites (Alibaba.com, 1688.com) in China and Lazada in Southeast Asia. It collects revenues mainly from commissions, marketing services, subscription fees, cloud computing and software, as well as other value-added services.

Alibaba has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2020 for e-commerce in China.

The company announced record Singles Day sales this week of a stunning $38 billion. More than half a billion people from a number of countries participate in the event, which is China’s equivalent to Black Friday and Cyber Monday, though Singles Day is much larger. The five-day Black Friday clocked less than $25 billion in sales last year, and Cyber Monday saw less than $8 billion. Alibaba said that it had netted its first $1 billion in sales in just 68 seconds and first $10 billion in half an hour.

The Raymond James price target for the stock is a stunning $280, and it compares with a consensus target of $222.54. The shares closed Thursday’s trading at $186.97 apiece.

CareDx

This rather off-the-radar clinical play was hit hard recently and has massive upside to the Raymond James price objective. CareDx Inc. (NASDAQ: CDNA) is a leading precision medicine solutions company focused on the discovery, development and commercialization of clinically differentiated, high-value health care solutions for transplant patients and caregivers.

CareDx offers testing services, products and digital health care solutions along the pre- and post-transplant patient journey, and it is the leading provider of genomics-based information for transplant patients.

Revenue for the three months ended September 30, 2019, was $33.8 million, compared with $21.2 million in the third quarter of 2018. Testing services revenue for the third quarter was $28.2 million, up from $16.8 million in the same period of 2018. Product revenue in the three months ended September 30, 2019, was $4.2 million, compared to $4.2 million in the same period of last year. Digital and other revenue for the third quarter of 2019 was $1.4 million, reflecting the recent acquisitions of OTTR and XynManagement.

Raymond James has a massive $50 price target, and the posted consensus target of $49.20 is also huge. The stock was last seen trading at $20.27, down over 3% on Tuesday.

This is a smart way for investors to play the fast-growing communications and content sector. EchoStar Corp. (NASDAQ: SATS) is the premier global provider of satellite operations and video delivery solutions. EchoStar’s wholly-owned subsidiary, Hughes, is the world’s leading provider of satellite broadband services, delivering network technologies and managed services for enterprise and government customers in more than 100 countries.

EchoStar is a multiple Emmy award-winning company that has pioneered advancements in the set-top box and satellite industries for nearly 30 years, consistently delivering value for customers, partners and investors through innovation and outstanding quality.

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The company’s consumer solutions include HughesNet, North America’s top high-speed satellite Internet service, Sling Media’s Slingbox products and EchoStar’s line of advanced digital video set-top box products for the European free satellite and terrestrial viewer markets.

The massive $61 Raymond James price target compares to both the $53.50 consensus target and the most recent close at $41.39 a share.

HealthEquity

This stock also has taken a hit this year and is offering a very good entry point. HealthEquity Inc. (NASDAQ: HQY) provides a range of solutions for managing health care accounts — Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs) — for health plans, insurance companies and third-party administrators.

Health Equity is engaged in technology-enabled services platforms that allow consumers to make health care saving and spending decisions. Its platform provides an ecosystem in which consumers can access their tax-advantaged health care savings, compare treatment options and pricing, evaluate and pay health care bills, receive personalized benefit and clinical information, earn wellness incentives and make educated investment choices to help in their tax-advantaged health care savings.

The company’s products and services include health care saving and spending platform, health savings accounts, investment advisory services, reimbursement arrangements and health care incentives.

The analysts have set a whopping $80 price objective. The consensus price target is posted at $76.31, but the shares closed way below both levels on Tuesday at $61.04.

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Tempur Sealy

If there is one product everybody has to have, it’s a bed, and this is an incredible way to play that need. Tempur Sealy International Inc. (NYSE: TPX) is a leading global manufacturer and distributor of bedding products, including mattresses, foundations, adjustable bases and other accessories, including pillows. The majority of the company’s sales are in the United States, where the company has around 30% market share. The company acquired Sealy in March 2013 and generated around $2.8 billion in sales in 2018.

The company reported another exceptional quarter with higher than expected sales and earnings per share driven by continued product momentum. In addition, it raised 2019 EBITDA guidance by a significantly larger amount than expected. Strong gross margins and sales trends are expected to continue in the fourth quarter. Top Wall Street analysts continue to see multiple avenues for earnings upside and multiple expansion.

Raymond James has set a large $105 price target. The posted consensus was last seen at $95.90, and the stock closed most recently at $86.17 per share.

These five Raymond James analysts’ favorite stock picks all have substantial upside potential to the price targets. While they are more suited for growth accounts with higher risk tolerance, they would make good portfolio additions at current price levels.