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With the market looking decidedly overbought, the question for investors is which way makes sense to rotate to. As we have mentioned in the past, while it sounds good, going to cash for most investors is difficult due to tax implications and commissions. One good idea is to rotate to stocks that may have lagged but still have solid upside potential.

A new Jefferies report focuses in on some growth companies that not only have solid upside potential, but also have catalysts that could help shape the upside possibilities. While not suitable for more conservative accounts, they could prove to be solid move for aggressive portfolios. All are rated Buy at Jefferies.

Cerner

This is a solid health care company that has good upside potential, and Jefferies thinks the growth potential is not appreciated. Cerner Corp. (NASDAQ: CERN) solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help health care organizations manage revenue, as well as a wide range of services to support clients’ clinical, financial and operational needs.

Jefferies surveyed hospitals late last year and found that only about 25% have replaced their electronic health record (EHR) systems. An EHR is a digital version of a patient’s paper chart, and they are real-time, patient-centered records that make information available instantly and securely to authorized users. The analysts feel that quality vendors like Cerner will continue to take share in these replacements.

Jefferies also cites the company’s PopHealth platform, which currently has 80 clients, with a potential to ramp up to as many as 400, which represents 1,100 hospitals. The analysts feel there could be a total revenue potential as high as $480 million if the platform is fully implemented.

The Jefferies price target for the stock is $68. The Thomson/First Call consensus estimate is $64.05. The stock closed Monday at $55.72.
Oncobiologics

This clinical-stage biopharmaceutical company is working on biosimilars that could challenge some of biggest drugs on the market. Oncobiologics Inc. (NASDAQ: ONSIU) focuses on identifying, developing, manufacturing and commercializing complex biosimilar therapeutics. Its current focus is on technically challenging and commercially attractive monoclonal antibodies (mAbs) in the disease areas of immunology and oncology. Oncobiologics is advancing its pipeline of eight biosimilar products, two of which are currently in clinical development.

Led by a team of biopharmaceutical experts, Oncobiologics operates from an in-house, state-of-the-art, fully integrated research and development and manufacturing facility in Cranbury, New Jersey. It employs its BioSymphony Platform to address the challenges of biosimilar development and commercialization by developing high quality mAb biosimilars in an efficient and cost-effective manner on an accelerated timeline.

Jefferies noted on its initiation of coverage that the company has a pipeline of large opportunity biosimilars, namely of Abbvie’s Humira and Roche’s Avastin. The analysts think that ONS-3010 does not infringe on Abbvie’s Formulation patents and they estimate 2025 U.S. sales of $246 million, with potential for upside from that level. Phase 3 trials for ONS-3010 is expected to start in the third quarter of this year.

Jefferies has a $7 price target, and the consensus target is much higher at $11. The shares closed Monday at $4.63.

WisdomTree Investments

This is the real up-and-comer in the exchange traded funds business, and it is carving itself out an outstanding share with many specialized ETF offerings. Wisdom Tree Investments Inc. (NASDAQ: WETF) continues to benefit from the movement towards ETFs. This is especially true with the specialized currency hedged products, with the potential for significant uptake in interest rate hedged products.

Wisdom Tree is run by Jonathan Steinberg, the son of famous Wall Street financier Saul Steinberg. He is also married to Maria Bartiromo, who became very famous on CNBC and now works for the Fox Business Network. Steinberg has a long and very distinguished ETF background, going back to the product’s infancy.

Jefferies notes that the move away from commissioned-based mutual funds to a fee-based system for ERISA accounts is a positive for the company and feels financial advisers will shift to index funds and ETFs. The firm also points out that 55% of industry assets are still in commission-based accounts, leaving plenty of room for the fee-based model to grow.

WisdomTree investors receive a 3.07% divided. The $13 Jefferies price target compares with consensus target of $11.47. Shares closed Monday at $10.40.

With the market looking precarious, it may make sense for investors to buy smaller positions now and look for a summer pullback to add stock at lower levels.