Starting the second quarter, the markets are down for the year, and with the average annual return for the S&P 500 for the past three years at 11.4%, it would appear we have nowhere to go from here but up. One thing is for sure, the sleepy days of no volatility look to be a thing of the past as we move back into a more normal trading mode. Now might be a good time to snap up some tech and health care shares as they took the brunt of the first-quarter selling.
Jefferies highlights the firm’s top growth stocks to buy each week, and this week is no exception. While these companies are better suited for accounts that have a higher risk tolerance, they all make good sense now, and all have outstanding upside potential. We found four that look extremely good now.
This company has been on a roll and looks to have more upside potential. Dexcom Inc. (NASDAQ: DXCM) is a medical device company that focuses on the design, development and commercialization of continuous glucose monitoring systems in the United States and internationally. The company offers its systems for ambulatory use by people with diabetes and for use by health care providers.
Its products include Dexcom G5 mobile continuous glucose monitoring system to communicate directly to patient’s mobile device, Dexcom G4 PLATINUM system for continuous use by adults with diabetes and Dexcom Share, a remote monitoring system. Dexcom has a collaboration and license agreement with Verily Life Sciences to develop a series of next-generation glucose monitoring products.
A recent FDA clearance is positive, and the analysts noted this:
The company received FDA clearance for its G6 sensor this week. This was slightly ahead of schedule. The G6 was cleared with no factory calibration claim, closing a key gap with Abbott’s Libre. Plans for launching the G6 could potentially move up to the second quarter. The earlier than expected launch should somewhat mitigate share shift and could help the company meet or exceed the upper end of the 2018 revenue guidance range.
The Jefferies price target is $70 but may move higher. The Wall Street consensus target is $70.36. The stock closed Monday’s trading above both levels at $74.53.
While this stock had been on fire, it could still have big upside. Exact Sciences Corp. (NASDAQ: EXAS) is a molecular diagnostics company focused on the early detection and prevention of the deadliest forms of cancer. The company has commercialized a next-generation non-invasive colorectal cancer screening test and Cologuard, which received concomitant FDA approval and Medicare coverage in 2014.
Cologuard is included in the colorectal cancer screening guidelines of the American Cancer Society and stool DNA is included in the U.S. Multi-Society Task Force on Colorectal Cancer. The stock is down almost 30% from highs posted in January and looks like a great buy at current levels.
The company reported fourth-quarter sales in line with the flash results and raised fiscal year 2018 sales guidance slightly with Cologuard volume guided in line. Jefferies met with management recently and noted this:
We met with the CFO and investors relations recently and came away incrementally confident in the long-term growth potential. Management remains confident in the Cologuard adoption ramp and ability to take meaningful share in the ~$14 billion colorectal cancer screening market over time through reorders, new doc adds, hospital systems and engaging with payor programs. Current penetration rates for potential patients is ~11 orders/doctor/year and one extra test/doctor/per year would equate to ~$100 million of rev upside to our 2020 estimates.
The Jefferies price objective remains at a strong $60, and the consensus target is $56.60. The shares closed Monday at $38.80.