Stock traders are known for their occasional love of aphorisms, and several come readily to mind. ‘Buy low, sell high’ and ‘don’t try to time the market’ are two that have stood the test of time, and while they may sound contradictory, that’s not necessarily the case. It’s possible to buy low even in an upward trend.
Checking in with Wall Street’s analysts, to find out if the fundamentals are sound, can give some indications if a stock’s pullback is just a temporary event. The analysts make their reputations by finding these opportunities, and bringing them to our attention.
With this mind, we’ve used the TipRanks database to search for three stocks that have seen such recent pullbacks – and that show plenty of upside potential ahead, according to the analysts. Let’s take a look at the details.
Cardiff Oncology (CRDF)
The first stock we’re looking at, Cardiff Oncology, is a clinical stage biopharma company with a laser-focus on cancer treatment. Specifically, the company focuses on the development of medication options for cancer patients whose current treatment has lost efficacy. Cardiff is developing onvansertib, a first-in-class, third generation Polo-like Kinase 1 (PLK1) inhibitor, designed to work in combination with existing medications to overcome treatment resistance, improve patient response, and increase survival rates.
Cardiff’s current research pipeline features onvansertib in three separate clinical programs, in combination with different existing drugs to combat three different cancers. The programs are a Phase 1b clinical trial of onvansertib plus Folfiri/Avastin the treatment of KRAS-Mutated Metastatic Colorectal Cancer (mCRC), and two Phase 2 trials, one in combination with Zytiga to treat Metastatic Castration-Resistant Prostate Cancer (mCRPC) and one to treat Relapsed/Refractory Acute Myeloid Leukemia (AML) in combination with Decitabine.
Preliminary data on these studies shows positive responses to onvansertib in combination with existing therapies. In the mCRC program, 86% of evaluable patients have shown a clinical benefit, while in the mCRPC program 54% of patients across three cohorts showed a radiographic stable disease. In the AML program, 20% of patients achieved a complete remission. These early data are considered significant, and the company has plans to initiate further trials later this year.
This background, along with the stock’s 50% fall year-to-date, have combined to catch the attention of 5-star analyst Jason McCarthy of Maxim Group. McCarthy points out that the shares have retreated recently due to ‘profit-taking and broader market changes.
“While valuation has pulled back since reaching a 52-week high in late 4Q, from a KRAS perspective, CRDF is not alone… and we view Cardiff as potentially having the more attractive asset in mCRC which continues to be supported with emerging data…. we still see a KRAS space that will continue to be active and is of potential high value given the unmet need, a company in Cardiff that is well-financed ($130M in cash as of YE20), and a drug in onvansertib that has multiple opportunities. Combined, we see this as an opportunity to buy CRDF shares on the weakness,” McCarthy opined.
McCarthy puts a Buy rating on CRDF, and his $30 price target implies a robust upside of 242% from current levels. (To watch McCarthy’s track record, click here)
Overall, this stock has a Strong Buy analyst consensus rating, and that verdict is unanimous, based on 3 recent positive reviews. The shares are selling for $8.62, and their $27.33 average price target suggests room for 212% appreciation this year. (See CRDF stock analysis on TipRanks)
Shifting gears, we’ll look into high-tech. Specifically, we’ll look at the world’s largest independent business intelligence company, MicroStrategy. This $6.3 billion company provides a winning combination of modern analytics, a comprehensive enterprise platform, and both cloud and on-site optimization options. MicroStrategy’s products let customers make smarter and faster decisions – a key advantage in today’s high-speed business world.
MicroStrategy’s shares peaked above $1,200 early in February this year, and have since retreated some 53%. The retreat in shares comes even as the company has doubled down on its commitment to bitcoin. Management started purchasing the cryptocurrency last August, as both a store of value and an investment, and MicroStrategy now holds more than $4.4 billion in BTC. The value of the cryptocoin has more than quadrupled since MicroStrategy started the purchases.
In a research report subtitled ‘Pullback Provides Attractive Entry Point,’ 5-star analyst Mark Palmer of BTIG notes two tracks for the company’s success.
First, “[We] believe MSTR’s adoption of Bitcoin as its primary treasury reserve asset represents a rational action aimed at protecting the company’s inherent value in the long run. At the same time, the strategy enables MSTR to capture upside arising from the increased adoption of the cryptocurrency by institutional investors concerned about mounting inflationary pressures.”
Second, Palmer goes on to add, “While most of the attention paid to MSTR has been focused on its adoption of Bitcoin as its primary treasury asset, we believe the company offers an attractive business analytics software play, especially as the company executes a shift from a product license model to a cloud-first, SaaS subscription model featuring mobile offerings.”
To this end, Palmer puts an $850 one-year price target on MSTG shares, along with his Buy rating. At current levels, this price target implies an upside of 42%. (To watch Palmer’s track record, click here)
MicroStrategy’s controversial bitcoin policy has generated some divisions among the Wall Street analysts, as shown by the most recent reviews – which break down to 2 to 1 to 1 in Buy/Hold/Sell. This gives the stock a Moderate Buy analyst consensus rating. The shares are selling for $600, and their average price target of $698.75 indicates a 16% upside for the coming year. (See MSTR stock analysis on TipRanks)
Let’s stay in the tech world, but look at online TV streaming. Roku is well known as a leader in that growing niche, where it helped to pioneer video on demand through its eponymous streaming player. The Roku player connects to the user’s TV, and the company provides connected streaming services. On Roku’s end, profits come from a combination of audience monetization and advertiser engagement.
Roku shares have slipped 25% since their recent peak in February this year. But even after recent losses, the stock is still up 184% over the past 12 months. The gains reflect Roku’s 2020 successes: Revenue was up 58% yoy, to reach $1.778 billion; 14.3 million new active accounts swelled the customer rolls to 51.2 million; and 38% of all smart TVs sold in the US during 2020 were Roku models.
In March of this year, Roku made two important acquisitions, adding the popular ‘This Old House’ franchise to its content line-up and partnering with Nielsen Holdings on ad and content measurement and video advertising. These moves came after Roku had, in January, acquired the rights to Quibi’s content library, now rebranded as ‘Roku Originals.’
Finally, while Roku is a content streamer – and has rightfully been focused on expanding its content offerings – it is also a tech company, with a tech company’s bent toward innovation. Earlier this month, Roku unveiled a new customer package that includes a voice activated TV remote, with a rechargeable battery, hands-free controls, and an audible remote finder. It’s a tech gadget that is sure to be appreciated on the customer end.
So, Roku is making the moves expected of a tech-oriented content streaming company. However, analyst Jeffrey Rand, of Deutsche Bank, sees the company’s main path forward lying in advertising.
“With ad revenue continuing to grow as a mix of revenue, we expect Roku to continue to focus its strategy on expanding its influence in the ad market. Its acquisition of Nielsen’s Advanced Video Advertising (AVA) business gives Roku an opportunity to take part in the ad market for linear TV…. We expect Roku to continue to look to invest organically and inorganically in opportunities to expand the role that it plays in the ad market, for both streaming and linear TV,” Rand noted.
At the bottom line, Rand sums up Roku as a solid choice for investors seeking a relative bargain: “While many growth-oriented tech companies have faced challenges in the current environment, with the transition to streaming continuing at a rapid pace, we see the recent pullback in Roku’s stock as a good buying opportunity.”
In line with this bullish outlook, Rand puts a Buy rating on ROKU shares, and his $500 price target suggests an upside of 43% over the next 12 months. (To watch Rand’s track record, click here)
So, there’s Deutsche Bank’s view, but what does the rest of the analyst fraternity think? All in all, the Street maintains a positive, although slightly more reserved stance. Based on 20 analysts tracked in the past 3 months, 14 rate ROKU a Buy, while 5 say Hold, and only 1 suggests Sell. Meanwhile, the 12-month average price target stands at $476.95, marking ~36% upside from current levels. (See ROKU stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.