An analyst upgrade can sometimes be highly useful in allowing you to learn about a new company that might have flown under-the-radar. With the markets trading at all-time highs investors are scrambling to find the best opportunities. In this article I am looking at three stocks that I believe are presenting such an opportunity, even after upgrades on Monday.
This Stock Continues to Rebound
After a year of no return in 2012, shares of Corning Incorporated (NYSE:GLW) have rallied 21% in 2013, and added another 1% on Monday following an upgrade by Barclays to Overweight. The company is a very large and diversified technology company, manufacturing the glass used on just about all technology devices.
Corning Incorporated (NYSE:GLW)’s durable Gorilla Glass saw some integration problems at first, but is now performing with exceptional efficiency. Furthermore, LCD glass prices are no longer decelerating but are rather stabilizing. As a result of these factors, I say Corning Incorporated (NYSE:GLW) is a definite buy with a P/E ratio of just 13.0.
A Great Long-Term Investment that Keeps Trending Higher
Shares of Pharmacyclics, Inc. (NASDAQ:PCYC) have rallied 210% in the last year alone, and 9,000% in the last five years, currently trading at $86. According to RBC Capital the stock still has upside, as the firm upgrades the stock with a price target of $100. RBC Capital cites the company’s potential blockbuster product, Ibrutnib, a product that is being co-developed with Johnson & Johnson, with revenue being split down the middle.
Ibrutnib is being developed to treat numerous conditions, with peak sales for the product estimated at over $4 billion total, or $2 billion for Pharmacyclics, Inc. (NASDAQ:PCYC) in 2020. Yet already the stock has appreciated to a valuation over $6 billion. Personally, I think it could become the next $20 billion single-product company such as Alexion Pharmaceuticals, however with launch on the horizon, most momentum biopharmaceutical stocks usually do see a bit of a speed bump in their climb higher. Thus I believe the outlook depends on your goals: If you’re a short-term investor then may want to wait for a larger pullback, but if you’re long then I say Pharmacyclics, Inc. (NASDAQ:PCYC) is a definite buy and hold.
A Fast-Growing Industry Commanding the Attention of Analysts
Canaccord issued a bullish report on 3D Systems Corporation (NYSE:DDD) on Monday including a $50 price target. According to the firm, 3D Systems Corporation (NYSE:DDD)’s strong printer and services revenue should allow it to beat expectations, thus suggesting that expectations are too low. The firm expects “multiple expansions” as the company monetizes and commercializes Bespoke Innovations’ 3D-printing carpal tunnel braces, which is a new acquisition.
When 3D Systems Corporation (NYSE:DDD) approached $40 back in January I said to sell, and then said to buy at $33, which I did. A couple weeks ago I sold my position at $42, and I think I may have made a mistake. While I do acknowledge that its price/sales of almost 11.0 is very expensive, I agree with everything in the Canaccord report. Yet due to the stock’s volatility, I’d expect a pullback at some point, but with 3D printing making a strong entrance into the consumer space, I think long-term that 3D Systems Corporation (NYSE:DDD) will pay great dividends.
Conclusion
As explained in my book Taking Charge With Value Investing (McGraw-Hill, 2013), it’s imperative that you determine the difference between analyst calls that create movement on new information and fundamental research versus those that simply “follow the analyst leader”. Each of the analysts in this piece, I believe, made valid points for their call, and thus are identifying value while upside is still present.
The article Three Value-Presenting Stocks With Upgrades on Monday originally appeared on Fool.com and is written by Brian Nichols.
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