For the first time in many years, many active managers are outperforming index funds in 2019, and that should be a loud wake-up call to passive investors. After more than a 10-year bull market, the bull is tired. Although central banks are still providing a liquidity security blanket, and interest rates remain at generational lows, this looks to many on Wall Street like the proverbial “stock-pickers” market.
With that being the case, and with many portfolio managers and investors looking for stocks that can outperform into year’s end and generate a little finish-line alpha, the analysts at Raymond James are all asked to submit their favorite stock pick. Analysts may only have one “buy” idea from their stocks under coverage rated Strong Buy or Outperform on the list at any given time.
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We screened the list looking for some new companies with the biggest upside to the Raymond James price target, and found five that look like solid picks for the fourth quarter and into 2020. All these favorite picks are rated Strong Buy.
Alibaba
This continues to be among the most bought tech stocks on Wall Street, as well as one of the most valuable brands in the world. Alibaba Group Holding Ltd. (NYSE: BABA) runs the largest retail marketplaces (Taobao, TMall) and leading B2B sites (Alibaba.com, 1688.com) in China and Lazada in Southeast Asia. It collects revenues mainly from commissions, marketing services, subscription fees, cloud computing and software, as well as other value-added services.
Alibaba has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. Top analysts expect a whopping 24% compounded annual growth rate between now and 2020 for e-commerce in China.
The company announced record Singles Day sales this week of a stunning $38 billion. More than half a billion people from a number of countries participate in the event, which is China’s equivalent to Black Friday and Cyber Monday, though Singles Day is much larger. The five-day Black Friday clocked less than $25 billion in sales last year, and Cyber Monday saw less than $8 billion. Alibaba said that it had netted its first $1 billion in sales in just 68 seconds and first $10 billion in half an hour.
The Raymond James price target for the stock is a stunning $280, and it compares with a consensus target of $222.54. The shares closed Thursday’s trading at $186.97 apiece.
CareDx
This rather off-the-radar clinical play was hit hard recently and has massive upside to the Raymond James price objective. CareDx Inc. (NASDAQ: CDNA) is a leading precision medicine solutions company focused on the discovery, development and commercialization of clinically differentiated, high-value health care solutions for transplant patients and caregivers.
CareDx offers testing services, products and digital health care solutions along the pre- and post-transplant patient journey, and it is the leading provider of genomics-based information for transplant patients.
Revenue for the three months ended September 30, 2019, was $33.8 million, compared with $21.2 million in the third quarter of 2018. Testing services revenue for the third quarter was $28.2 million, up from $16.8 million in the same period of 2018. Product revenue in the three months ended September 30, 2019, was $4.2 million, compared to $4.2 million in the same period of last year. Digital and other revenue for the third quarter of 2019 was $1.4 million, reflecting the recent acquisitions of OTTR and XynManagement.
Raymond James has a massive $50 price target, and the posted consensus target of $49.20 is also huge. The stock was last seen trading at $20.27, down over 3% on Tuesday.
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