Most experienced investors are well aware of the major indexes that compose the equity markets. In the United States, the three main indexes are very familiar: the Dow Jones industrial average, the S&P 500 and the Nasdaq 100. However, among the most closely tracked groups of indexes by institutional investors and portfolio managers are the MSCI indexes.
MSCI is a leading provider of research-based indexes and analytics, and it has announced the results for the MSCI Equity Indexes additions and deletions, including the MSCI Global Standard, MSCI Global Small Cap and MSCI Micro Cap Indexes, the MSCI Global Value and Growth Indexes, the MSCI Frontier Markets, MSCI Frontier Markets Small Cap Indexes, the MSCI Global Islamic and MSCI Global Islamic Small Cap Indexes, the MSCI Pan-Euro and MSCI Euro Indexes, the MSCI US Equity Indexes, the MSCI US REIT Index, the MSCI China A Onshore Indexes and the MSCI China All Shares Indexes. All changes will be made as of the close of November 30, 2020.
The indexes are rebalanced twice a year, and at the end of November, a huge rebalance is set to occur. That means some major buying in some very well-known companies. We screened for the five top U.S. stocks that are new additions that should get a major buying push, and all make sense for aggressive growth investors.
We have listed the five in order of the numbers of net shares to trade, and all are rated Buy at top Wall Street firms. It is important to remember, though, that no single analyst report should be used as a sole basis for any buying or selling decision.
Horizon Therapeutics
This may be a great play for more speculative investors looking for health care ideas. Horizon Therapeutics PLC (NASDAQ: HZNP) focuses on researching, developing and commercializing medicines that address unmet treatment needs for rare and rheumatic diseases in the United States and internationally.
The company’s orphan and rheumatology marketed medicines include the following:
- Krystexxa, a medicine for the treatment of uncontrolled gout
- Ravicti for use as a nitrogen-binding agent for chronic management of adult and pediatric patients
- Procysbi for nephropathic cystinosis, a rare and life-threatening metabolic disorder
- Actimmune for chronic granulomatous disease
- Rayos for the treatment of multiple conditions, rheumatoid arthritis
- Buphenyl tablets for oral administration and Buphenyl powder for oral, nasogastric or gastrostomy tube administration
- Quinsair, a formulation of the antibiotic drug levofloxacin for the management of chronic pulmonary infections due to pseudomonas aeruginosa in adult patients with cystic fibrosis
Last January the U.S. Food and Drug Administration (FDA) approved Tepezza (teprotumumab-trbw) for the treatment of adults with thyroid eye disease, a rare condition where the muscles and fatty tissues behind the eye become inflamed, causing the eyes to be pushed forward and bulge outward. The approval represented the first drug approved for the treatment of thyroid eye disease.
BofA Securities has a $101 price target on the shares, which is in line with the Wall Street consensus target of $100.67. Horizon Therapeutics stock traded at $74.45 on Friday, and 3,621,582 net shares are expected to trade.
DraftKings
The company became a huge favorite with younger people due to the surge in popularity of fantasy football. DraftKings Inc. (NASDAQ: DKNG) operates as a digital sports entertainment and gaming company. It provides users with daily sports, sports betting and iGaming opportunities. It also is involved in the design and development of sports betting and casino gaming platform software for online and retail sportsbook and casino gaming products.
The company entered the market back in April in a time when most companies were putting off their initial public offerings. The offering was not an IPO in the truest sense because DraftKings came public through a merger with a special purpose acquisition company called Diamond Eagle, but similar rules applied.
The stock was hammered after a big move and is offering aggressive investors an incredible entry point. Top Wall Street analysts feel that sports betting should accelerate after the pandemic and the market for sports betting in the United States could reach $19 billion by 2023 to 2025. They also expect that in 2021 and beyond, engagement with digital leisure, pent-up appetite for sports and political realities should position DraftKings to accelerate.
DraftKings reported outstanding third-quarter results this morning. Revenue came in at $133 million, an increase of 98% from the same period in 2019. The company raised its fiscal year 2020 pro forma revenue guidance from a range of $500 million to $540 million to a range of $540 million to $560 million, which equates to year-over-year pro forma revenue growth of 25% to 30% in 2020, despite COVID-19’s impact on the major sports calendar.
Oppenheimer boosted its price target in October to $65 from $55. The consensus target is $58.11, and DraftKings stock was trading at $44.15. Look for 2,797,524 net shares to be traded.
Cloudflare
This off-the-radar cybersecurity pick has big potential upside in a red-hot industry, and it could be a potential takeover target. Cloudflare Inc. (NYSE: NET) provides an integrated cloud-based security solution to secure a range of combinations of platforms, including public cloud, private cloud, on premise, software-as-a-service applications, and Internet of Things (IoT) devices.
Cloudflare’s security products include Cloud Firewall, Bot Management, Distributed Denial of Service, Infrastructure Protection, IoT, SSL/TLS, Secure Origin Connection and Rate Limiting. The company also offers performance solutions, which include Content Delivery, Intelligent Routing, and Mobile Software Development Kit, as well as Content, Mobile, and Image Optimization.
In addition, the company provides Reliability solutions, comprising Load Balancing, Anycast Network, Virtual Backbone, DNS, DNS Resolver and Always Online. Further, the company provides solutions to protect an organization’s internal resources, such as devices, users, applications and data, comprising Zero Trust Security and Access Management, which secures, authenticates and monitors user access to internal applications and infrastructure hosted on-premise or in cloud environments, as well as Secure Web Gateway to secure and filter outbound internet traffic to protect employees from threats on the public internet and to help protect internet-browsing employees from bringing malware or vulnerable code into an organization.
The $70 Jefferies price objective was lifted to $80, and the consensus target is $66.07. Cloudflare stock traded at $63.95 on Friday, and 2,534,161 net shares are slated to trade.
Ceridian HCM
This is yet another off-the-radar stock that has been on fire, exploding off the September lows. Ceridian HCM Holdings Inc. (NYSE: CDAY) operates as a human capital management (HCM) software company in the United States, Canada and internationally.
The company offers Dayforce, a cloud HCM platform that provides human resources (HR), payroll, benefits, workforce management and talent management functionality, as well as Powerpay, a cloud platform that offers scalable and straightforward payroll and HR solutions. It also provides Bureau solutions for payroll and payroll-related services. The company sells its solutions through its sales force and third-party channels.
Needham’s recently lifted target price of $105 compares to a consensus figure of $93.93. Of Friday, shares traded at $95.00. Some 2,182,170 net shares are expected to be traded.
24/7 Wall St.PPD
This is an outstanding play for biotech investors looking for a solid but perhaps less volatile alpha idea. PPD Inc. (NASDAQ: PPD) provides drug development services to the biopharmaceutical industry worldwide and seeks to help customers accelerate the development of safe and effective medicines and maximize returns on their research and development investments.
The company operates through Clinical Development Services and Laboratory Services segments. It offers clinical development services, including product development and consulting, early development, Phases 2 to 4 clinical trial management, accelerated enrollment, peri- and post-approval and medical communications services.
PPD also provides laboratory services comprising bioanalytical, biomarker, vaccine science, good manufacturing practice and central laboratory services. It serves pharmaceutical, biotechnology, medical devices and government organizations, as well as other industry participants.
Truist Securities initiated coverage in October with a $42 price objective. The consensus estimate is $39.87, and shares were trading at $34.25. Some 2.005,285 net shares are expected to trade.
It is important to remember that while millions of net shares are expected to trade for the new additions, in at least two cases, they trade many shares more on an average daily volume basis. Still, the addition to the MSCI indexes, and those that are run by companies that mimic the indexes, is always a positive.
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