Investing

4 Red-Hot Tech and Biotech Stocks to Buy With Up to 100% Upside Potential

Lee Jackson
SMART Global Holdings

This company was this year’s moonshot initial public offering and has continued to post exploding earnings. SMART Global Holdings Inc. (NYSE: SGH) provides specialty memory solutions. It manufactures memory for desktops, notebooks, servers and mobile memory for smartphones. The company serves original equipment manufacturer (OEM) customers to develop memory solutions.

SMART provides customized, integrated supply chain services to certain OEM customers to assist them in the management and execution of their procurement processes. The company offers its products and services under a range of categories, including dynamic random-access memory (DRAM) components, DRAM modules, flash components, mobile memory and supply chain services.

The company posted massive earnings last week that trounced that numbers it had already raised higher in November. Stifel analysts have the stock highly ranked on their Select List. They said why in a recent research note:

The company delivered a strong beat to the pre-announced upside to estimates from a month ago. February quarter outlook also beat the pre-announced expectations for flat sequential results. Management is now looking for 9% growth quarter over quarter in the seasonally weak February ending quarter. SMART global holdings remains on our Select List as a top long idea. The company has many favorable trends – recovering Brazilian economy, increasing dollar content in smart phones built in Brazil, strong worldwide demand for memory/storage products and an experienced management team.

Stifel raised its $40 price target to $47, while the consensus target is $45.50. Shares closed trading on Tuesday at $33.58.

Western Digital

This long-time innovator in the storage industry is a leader in the total addressable HDD market. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that help to create, manage, experience and preserve digital content.

The company is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

Western Digital stock traded down after earnings despite being above Wall Street earnings expectations for the fourth quarter and fiscal 2018, as investors were concerned about peak margins. Analysts feel that NAND supply-demand will not come into balance until mid-calendar 2018, creating forward upside potential.

In addition, the long-drawn dispute with Toshiba finally was put to rest, and Merrill Lynch recently said this:

The global settlement is positive as it removes uncertainty of NAND supply for Western Digital and the company gets to protect its intellectual property. The company positively preannounced the December quarter (revenue high end, margins came in better, offset somewhat by higher operating expense). Visibility has improved and management expects the flash supply/demand environment to remain healthy throughout 2018.

Shareholders receive a 2.42% dividend. The $120 Merrill Lynch price target compares with a $115.77 consensus target. The stock closed trading on Tuesday at $80.00.

Two biotech and two tech stocks that not only have big upside potential, but they are priced right for investors looking for good entry points. Again, these are only suitable for very aggressive accounts with high risk tolerance.