Over the last few months, stocks have finally started to fall after one of the longest bull markets in history.
While these last couple of months have been painful, this downturn has presented a few incredible buying opportunities for stocks that appear to be woefully under priced.
Here’s what you need to know about three such stocks.
Amarin (NASDAQ: AMRN)
In fact, analysts’ average price target for AMRN is $33.20, suggesting possible upside of 87.25% over the next twelve months. Just last week, HC Wainwright reiterated its Buy rating for the stock and set its price target at $51 – 187.6% higher than Thursday’s closing price.
Unlike most biotechs, Amarin performed pretty well in 2018. The stock surged in September after the company reported unprecedented results in a large cardiovascular trial of its prescription omega-3 fish oil pill. Shares rose as much as 677% between the end of September and early November, and the stock is currently up roughly 300% in the last year.
But the stock still has a ways to go before it could be considered expensive, or even fairly valued.
The fish oil treatment, Vascepa, appears to be a straightforward and cost-effective way to significantly decrease mortality rates for patients with stubbornly high triglyceride levels. Vascepa reportedly retails for $349 for a 30-day supply, which is just a fraction of the cost of an extended hospital stay after a patient has a heart attack or stroke.
What’s also encouraging is that Vascepa could potentially enter one of the largest and most lucrative markets in the healthcare space following its fantastic trail results. Many of the best-selling drugs of all time target patients at risk of developing cardiovascular disease. Right now, Vascepa’s current peak sales projection is $2.5 billion, which is nothing to scoff at, but it has the potential to surpass that sales estimate within the next 5 to 10 years.
As such, bargain hunters may want to scoop up this stock now before it skyrockets.
Dropbox (NASDAQ: DBX)
There are a lot of investors out there that don’t like Dropbox (NASDAQ: DBX), and argue that the company’s product isn’t differentiated vs. its peers like tech giants Microsoft (NASDAQ: MSFT), and Google (NASDAQ: GOOGL, GOOG), which include free storage offerings.
However, the company offers both scalability and is a leader in the software-as-a-service (SaaS) space. Its product is system agnostic, and users like it more than they like similar peer products.
And this dynamic has led to partnerships with said competitors, as Google’s G Suite and Microsoft are now two of Dropbox’s biggest partners.
Mark Mahaney at RBC recently set his price target for the stock at $37, nearly 60% higher than the current share price.
“Each quarter, we have become increasingly impressed with DBX’s business and financial model,” Mahaney said. “Best of breed FCF margins (33% in Q3) coupled with robust, consistent revenue growth.”
According to Mahaney, the company’s freemium model enables extremely cost-efficient customer acquisition, very high customer retention levels, and substantial revenue visibility with numerous upsell opportunities.
Eleven of the fifteen Wall Street analysts covering the stock rate it a Buy. Their average twelve-month price target for DBX is $34.31, indicating possible upside of 46.68%.
Tailored Brands (NYSE: TLRD)
The parent of brands like Men’s Wearhouse and Jos. A. Bank is down -51% over the last year, and -76% over the last five years.
But don’t count Tailored Brands (NYSE: TLRD) out. The menswear company has been streamlining by closing underperforming stores, changing management, reducing debt, and it has honed its focus on initiatives like custom suiting to deliver positive comps and solid profits.
And those changes seem to be working. In its last earnings report, the company reported comparable sales up 2.3% and adjusted earnings per share up to $1.01 from $0.75.
Shares have declined recently after the company cut its guidance in its Q3 earnings report, and then revised it down again earlier this week. But the sell-off has made the stock a serious value.
The stock is trading at a P/E of just 5.3 based on adjusted earnings per share of $2.25 to $2.30 for the current year. It’s even cheaper on a price-to-free cash flow basis, which is at 2.1 as Tailored Brands has $290 million in trailing free cash flow.
Add in a dividend yield of 6.2%, and the stock’s recent slide makes it too cheap to ignore. Shares are likely to continue to be volatile, but the stock could see considerable upside for those willing to stomach the risk.
The average analyst price target for TLRD is $22, suggesting possible upside of 83.18% over the next twelve months. Last month, Deutsche Bank set a price target for the stock of $24 – nearly 100% higher than the current price.