With the market at all-time highs and stocks with crazy valuations dominating headlines, it can be daunting to find stocks with reasonable valuations that still have upside ahead.
100% of the analysts covering these two stocks rate them a Buy and those covering these stocks say substantial gains lie ahead for both.
Heron Therapeutics (NASDAQ: HRTX)
If you’ve been searching for an undervalued biotech to add to your portfolio, Heron Therapeutics (NASDAQ: HRTX) fits the bill at a price to book ratio of 7.02. The company is also expected to report $18.9 million in sales for this quarter representing 120.5% year-over-year growth when compared to reported sales of $8.57 million in the same quarter last year.
Heron Therapeutics has two drugs on the market—SUSTOL and CINVANTI—which are approved to prevent Chemotherapy-Induced Nausea and Vomiting (CINV), and is pushing forward with reformulated drugs.
Analysts are bullish on Heron’s HTX-011 candidate, a “fixed-dose combination of the local anesthetic bupivacaine with the nonsteroidal anti-inflammatory drug (NSAID) meloxicam,” which targets both pain and inflammation post-surgery.
According to Northland Securities analyst Carl Byrnes, HTX-011 looks likely to become the best-in-class therapy for postoperative pain management as the drug delivers sustained pain relief for the first 72 hours after surgery, reducing the need for prescribing opioids.
All ten analysts covering HRTX rate the stock a Buy with an average 12-month price target of $50.80, indicating 35% possible upside ahead. However, Evercore ISI recently boosted its price target for the stock to $80 – 116% higher than Thursday’s closing price.
Alibaba Group (NYSE: BABA)
Alibaba (NYSE: BABA) needs no introduction.
The Amazon (NASDAQ: AMZN) of China had a rough summer and is down more than 30% since its June highs. The sell-off in emerging markets has hit BABA hard, but this fall could be a great buying opportunity as the stock is starting to look like a bargain.
Alibaba’s growth rates have been fantastic. In its fiscal Q1 2019 results reported in August, BABA delivered 61% year-over-year revenue growth to $12.229 billion. And excluding its one-time stock-based compensation, its bottom like increased by 33% year-over-year.
“We delivered another great quarter with 61% revenue growth as well as strong profit growth, excluding one-time items. We are please with the strength and rapid growth of our business at such significant scale,” said Alibaba’s Chief Financial Officer, Maggie Wu. “The exceptional growth across our major segments of core commerce, cloud computing and digital media and entertainment validates our strategy of investing in customer experience, product, technology and infrastructure for the future. We remain confident in our ability to continue to gain market leadership by delivering unique value propositions to our business customers, partners and consumers.”
BABA’s core commerce segment increased 61% year-over-year to $10.456 billion. Its cloud computing revenue soared 93% year-over-year to $710 million, and its revenue from digital media and entertainment rose 46% year-over-year to $903 million.
The Chinese tech giant’s commitment to investing in technology is continuing to pay dividends and the company shows no sign of slowing down despite its beaten down stock price. In fact, the company is deepening its moat and gaining market share hand over fist.
Of the twenty-seven analysts covering BABA, twenty-six rate the stock a Buy and one rates it a Strong Buy. The 12-month consensus price target for the stock is $231.73, suggesting 45% upside ahead. In July, Susquehanna Bancshares issued a 12-month price target for BABA of $305 – nearly 91% higher than today’s price.