The stock market has been rallying to record levels so far this year, with the S&P 500 enjoying its best start the new year in 32 years.
But with that, it can be difficult to find stocks that are still trading at attractive levels with plenty of potential upside ahead.
With that in mind, I set about looking for a few stocks with strong Buy ratings from the Street that analysts say have at least 25% possible upside on the horizon.
iQiyi was spun-off from Chinese search behemoth Baidu (NASDAQ: BIDU) in early 2018. After a somewhat sluggish IPO, the stock exploded by 61% in just three months before crashing below $15 per share at the beginning of January. Since then, however, the stock is up just over 50% year-to-date as sentiment on Chinese stocks improves as the U.S. and China near a trade agreement.
Despite this uneven stock performance, IQ’s underlying business has continued to grow at a rapid pace, with the company posting 55% top-line growth and 72% subscriber growth in its fourth quarter.
Volatility is likely to continue for IQ for the foreseeable future, though we could see the stock surge higher once a trade deal is reached. As for the economic slowdown in China that continues to dominate headlines, IQ isn’t likely to see much of a slowdown in growth as more citizens are gaining access to the internet and disposable income increases in the country.
If you can handle volatility and are looking for an investment that has the ability to explode higher quickly, IQ is a good option. Seven analysts covering the stock rate it a Buy and their average price target for IQ is $29.80, indicating possible upside of 29.6% over the next twelve months.
Our next strong-buy rating stock is The Medicines Company (NASDAQ: MDCO). MDCO is a biopharma that focuses on cardiovascular, infectious, and intensive care medicine.
According to Chardin Capital analyst Gbola Amusa, investors should keep an eye on the late-stage development of the company’s twice-yearly cholesterol-lowering treatment, inclisiran. The company is expected to report interim phase II data on the drug candidate on May 18 and May 27, before releasing the pivotal phase III readouts in Q3.
“Given cost-efficient execution by MDCO on advancing towards multiple inclisiran clinical readouts in the coming months, including the pivotal phase III readout of inclisiran in 3Q19, we maintain our high-conviction Buy rating and increase our PT to $90 (from $85),” Amusa wrote late last week.
Amusa’s price target of $90 would see the stock rise 177.5% over the next twelve months. All nine of the analysts covering the stock rate it a Buy and their average price target for MDCO is $62.63, indicating possible upside of 93%.
The last pick on our list is cloud stock Cloudera (NYSE: CLDR).
This stock has been on a wild ride since its debut in April 2017. Within a little over a month of its IPO, CLDR was up 31%. However, since then, the stock has struggled and is now sitting 38% below its debut price.
Cloudera struggled last quarter—its fourth quarter of fiscal 2019—thanks in part to “dis-synergies” in its merger with Hortonworks related to the two companies’ differing billings schedules, and the company projects that it will post negative operating cash flow for the coming year.
However, the combined companies of Cloudera and Hortonworks have yet to fully release their Cloudera Data Platform (CDP), which incorporates the best of both of the companies in a single enterprise platform.
CDP is expected to come out this year, and will give enterprises an end-to-end view of all of their data. If this product catches on, and the company is able to grow its annualized recurring revenue to 20% to 25% as management expects it will, Cloudera could prove to be a bargain at current levels.
And the smart money is betting the company can do just that, with hedge funds more bullish on the stock than they’ve ever been. There’s currently a total of 26 hedge funds that are holding long positions in this stock – that’s up from just 14 a year ago.
Analysts are also bullish on CLDR, with thirteen Buy ratings on the Street and an average price target of $19.25, suggesting possible upside of 74% over the next twelve months.