In a pricey market, it gets harder and harder to find stocks that look solid and have the kind of upside potential that warrant owning in a period when volatility can spike for any number of reasons. Some Wall Street strategists see a Republican victory in November as a huge tail risk. Others point to a deafening chorus of anti-American rhetoric from everywhere from the Middle East to Russia.
One thing is for sure, the sun will rise regardless of who wins in three weeks, and top stocks with big upside potential can still reach that goal. We screened the Merrill Lynch research database and found five companies rated Buy that have big upside targets for aggressive accounts.
This company had a red-hot IPO and has backed up sharply since a recent secondary offer. Acacia Communications Inc. (NASDAQ: ACIA) is a leading supplier of high-speed coherent optical interconnect products to network equipment manufacturers, hyperscale cloud companies and service providers. The company’s foundation is in its Digital Signal Processing (DSP) and a unique approach with its silicon-based photonic integrated circuit (SiPhi PIC). The company primarily combines the DSP and PIC to create modules, which are integrated into optical/networking equipment to provide high-speed optical interconnect.
Merrill Lynch loves the company and the growth potential, and recently it said this when raising its price target:
We are increasing our estimates following Acacia’s positive preannouncements and secondary offering completed last week. Acacia continues to benefit from strong demand across Web 2.0 direct customers, Chinese OEMs, and metro 100G cycles.
The Merrill Lynch price target for the stock is a stunning $130, and the Wall Street consensus target is $119. Shares closed Wednesday at $88.37.
This company had a hot IPO in 2014. While down almost 15% in the past month, it has rallied back smartly off the lows. CyberArk Software Ltd. (NASDAQ: CYBR) claims it is the only security company focused on eliminating the most advanced cyber threats, those that use insider privileges to attack the heart of the enterprise. The company proactively secures against cyber threats before attacks can escalate and do irreparable damage. Some 35% of the Fortune 100 and 17 of the world’s top 20 banks use the software to protect high value information assets, infrastructure and applications.
The constant hacking and malware threats continue and many on Wall Street realize that the bigger players in the niche, while volatile, are solid long-term plays. A Merrill Lynch report last month said this:
We hosted CyberArk management and came away more confident in the PAM market opportunity and the company’s leadership & market focus. Management’s tone was bullish; it reiterated recent comments about the potential market size, competitive advantages and outlook. We see substantial long term revenue and earnings-per-share growth potential driven by new wins, deeper existing customer penetration, and cloud adoption.
Merrill Lynch has a $62 price target, and the consensus target is $58.18. Shares closed on Wednesday at $45.20.