7 Growth Stocks to Buy for Oodles of Upside

Stocks are firing on all cylinders again and have clawed back most of their bear-market losses. But investors fearing that all of the high-upside opportunities have passed them by can breathe easy. There are still numerous growth stocks to buy if you know where to look.

It’s a strange environment for growth investors. On the one hand, U.S. GDP dropped 5% during the first quarter of 2020, and economic declines are widely expected for Q2 as well. Unemployment rebounded to “just” 13.3% in May, and while COVID-19 has been pushed out of the spotlight, that danger hasn’t simply disappeared.

On the other, stocks have rebounded vigorously off the March lows. The Nasdaq Composite is actually positive year-to-date, and both the S&P 500 and Dow Jones Industrial Average have recovered to single-digit losses.

Despite this confusing economic climate, there are still plenty of compelling growth stocks on the board, according to Wall Street analysts. We’ve recently tapped TipRanks’ database to identify seven such picks – from established mega-caps to high-risk, high-reward small caps – that are beloved by the majority of professionals who cover these stocks day in and day out.

The result? Seven growth stocks to buy that the analysts broadly believe will deliver returns of anywhere between 17% and 63% over the next 12 months.

Applied Materials (AMAT, $58.13) provides its customers in the semiconductor, flat panel display and solar photovoltaic (PV) industries with cutting-edge solutions. The company has performed roughly in line with the broader market throughout the downturn, but Wall Street views AMAT as one of several growth stocks to buy for outperformance going forward.

“AMAT provided some encouraging outlook by segment, standing out from most of its peers,” Susquehanna’s Mehdi Hosseini (Buy) wrote after the company provided results for the April quarter, which included better-than-expected results from the Applied Global Services and Display segments.

Hosseini writes that “AMAT foresees double-digit revenue growth in 2020,” while noting that the company’s Silicon Systems Group is expected to deliver double-digit growth this year. He also writes that Chinese Wafer Fab Equipment will have a “strong year” approaching roughly $9.5 billion.

Meanwhile, KeyBanc analyst Weston Twigg recently reiterated an Overweight rating, saying that Applied Materials has been overlooked. “We view the semiconductor equipment group as relatively attractive amid the pandemic … We expect AMAT to continue to gain share and expand its (serviceable addressable market) while demonstrating compelling earnings leverage.”

The overall analyst consensus, spread across 14 Buys and five Holds, is for roughly 17% upside over the next 12 months. However, price targets from Hosseini and Twigg are more optimistic, indicating the potential for 27% to 30% gains from current prices. You can learn more about the analyst community’s views on AMAT via TipRanks’ consensus breakdown.

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Market value: $584.9 billion

TipRanks consensus price target: $255.35 (17% upside potential)

TipRanks consensus rating: Strong Buy

Tech giant Alibaba (BABA, $218.04) caught the Street by surprise with its last quarterly report.

This top Chinese stock grew its March-quarter revenues by 22.3% year-over-year to $16.1 billion, flying past expectations for $15.2 billion. Adjusted EPS of $1.30 per share were nearly 50% better than the consensus estimate.

SunTrust Robinson analyst Youssef Squali said the results demonstrated “the beginning of a rebound in March and material improvement in consumer demand in China QTD.”

Alibaba guided for current fiscal-year revenues to grow 27.5% year-over-year. “While management did not provide explicit guidance for profitability, we believe commentary suggests that the company will continue to aggressively invest in long-term initiatives, and that profit growth is likely to lag top line growth in FY21,” Squali writes.

“While near-term uncertainty remains about COVID’s lingering impact in/outside of China, we believe this crisis is causing big structural changes, and is accelerating the shift in consumption habits online, especially in lower-tier cities and segments with lower online penetration like food/grocery,” continues Squali, who has a Buy recommendation and $240 price target on BABA shares. “This should continue to drive greater financial benefit to BABA as the dominant platform.”

RBC Capital’s Mark Mahaney (Outperform, $235 PT) is a little more straightforward, calling Alibaba “arguably the single best play on the growth of the internet in China.”

Analysts’ notes from the past three months imply 17% upside, which ranks near the bottom of these seven growth stocks to buy. But that’s tremendous potential for a $585 billion mega-cap. Meanwhile, Wall Street’s positivity is nearly unanimous, at 16 Buys versus just one Hold over the past quarter. Check out other analysts’ price targets for BABA on TipRanks.

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Market value: $1.6 billion

TipRanks consensus price target: $6.26 (25% upside potential)

TipRanks consensus rating: Strong Buy

Plug Power (PLUG, $5.00) is an alternative-energy play that produces hydrogen fuel cell systems designed to replace lead-acid batteries in electric material handling vehicles and industrial trucks. While PLUG shares have historically been a roller coaster of a play, Wall Street thinks the stock will continue climbing the hill for now.

Alongside its most recent earnings release, PLUG revealed that it was set to acquire United Hydrogen Group along with an electrolyzer technology platform company. Oppenheimer analyst Colin Rusch weighed in, writing that “the acquisitions strengthen PLUG’s hydrogen generation and distribution capability, while providing a roadmap for lowering its hydrogen costs and expanding its (total addressable market).”

“We believe PLUG continues to work with customers to reduce its restricted cash balance given resilient operations and improved liquidity position,” adds Rusch, who has an Outperform rating and $6 price target on PLUG stock. “We believe the company may free up that cash or use the restricted cash to enable accelerated growth.”

The baseline case? “In our view, PLUG is among the industry leaders in fuel cell system design and implementation for the motive market. We see forklifts as a multi-year growth opportunity that supports valuation upside and believe PLUG can expand into over-the-road vehicles given its leadership in fuel cell integration for motive applications.”

He’s not alone in his bullishness. Over the past quarter, six analysts have written Buy notes, versus just one Hold – good for a Strong Buy consensus on this growth stock. The consensus price target is higher than Rusch’s, too, at $6.26 per share. Investors interested in learning more can check out the PLUG analysis on TipRanks.

SEE ALSO: Reap the Recovery’s Rewards With These 7 Growth ETFs

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Market value: $1.9 billion

TipRanks consensus price target: $44.25 (34% upside potential)

TipRanks consensus rating: Strong Buy

H.C. Wainwright’s Robert Burns says Revolution Medicines (RVMD, $33.03) is “on the cutting edge of precision medicine in oncology.”

Burns writes that the company focuses on “frontier targets – key signal transduction proteins for which there are either: (1) no available direct inhibitors; or (2) the only agents directly inhibiting these targets work by a mechanism of action that may not suppress the full range of ways in which downstream signaling can drive cancer.”

The company’s most advanced product – RMC-4630, which it’s developing in partnership with French pharmaceutical firm Sanofi (SNY) – is currently being evaluated in early-stage trials, both on its own and in combination with MEK inhibitor Cotellic (cobimetinib).

Burns, who has a Buy rating and $55 price target (67% upside) is optimistic given the “key validating partnership with a major pharmaceutical firm (Sanofi).” That deal includes a $50 million upfront payment made in June 2018, up to $520 million in total future milestone payments, an even profit split and 80% coverage of R&D costs.

He also points out that RMC-4630 has produced “encouraging efficacy data thus far” and points out that additional data from the Phase 1 monotherapy trial and Phase 1/2 combination trial are slated for release later this year.

Revolution Medicines is a smaller company that doesn’t have a robust analyst following. But of the five pros that have sounded off over the past three months, four say Buy and the lone dissenter is a mild Hold. For even more insights on RVMD and other biotech stocks, take advantage of TipRanks.

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Market value: $7.8 billion

TipRanks consensus price target: $121.67 (47% upside potential)

TipRanks consensus rating: Strong Buy

Guardant Health (GH, $82.67) specializes in designing blood tests for early detection in high-risk populations and recurrence monitoring in cancer survivors. And its impressive first-quarter showing demonstrates why GH shares are among Wall Street’s more beloved growth stocks right now.

Canaccord Genuity analyst Max Masucci writes that “(Guardant Health) is the epitome of precision medicine and continues to drive a major shift from a ‘one-size-fits-all’ approach to a personalized approach to cancer care, despite COVID-19.”

Guardant, like many companies, withdrew full-year 2020 revenue guidance, which was for revenues of $275 million to $285 million, representing 28% to 33% year-over-year growth. However, Masucci writes, “we continue to view its guide as achievable due to “the resiliency of G360 volumes and the nature of Guardant’s end user.”

“Despite COVID-19 disruption, cancer care can only be delayed for so long, and the personalized approach to patient management enabled by G360 is almost undeniable at this point.”

Masucci, who has a Buy rating and $125 price target on GH shares, also expects Guardant to launch an NGS-based (next-generation sequencing) COVID-19 screening test soon. He says management is targeting a goal of at least 10,000 tests per day with a turnaround time of 24 to 36 hours.

GH has a small analyst following, but the three pros that have chimed in over the past three months have all issued Buy-equivalent ratings. Get the full analyst consensus and price target breakdown for GH on TipRanks.

SEE ALSO: 7 Biotech Stocks Wall Street Says Will Double or More

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Market value: $560.6 million

TipRanks consensus price target: $7.50 (60% upside potential)

TipRanks consensus rating: Strong Buy

Limelight Networks (LLNW, $4.69) operates as a content delivery network (CDN) service provider, offering solutions that help organizations deliver digital assets that are fast, reliable and secure. This small-cap stock has put up a choppy 15% gain so far in 2020, but several analysts believe that despite weakness of late, there’s plenty of fuel left in this growth stock.

Northland Capital analyst Michael Latimore tells clients, “LLNW is a company with improving growth rates, expanding margins, and top tier customers; and getting a little help via work-from-home.” Moreover, “LLNW has perfected its platform for (over-the-top) video and is in every conversation among new meaningful OTT video and live event providers.”

That said, Limelight doesn’t necessarily need to be the top provider for each of its clients. Instead, it tries to “strike a balance to maximize EBITDA margins and cash flow. Sometimes margins at the #1 spot at a large customer are thin,” Latimore writes.

The reasons for optimism are myriad. LLNW is seeing more daily traffic than ever before. New sports content is slated for the second half of 2020. And while other companies are rescinding guidance, Limelight has raised its full-year expectations twice already. That has Latimore comfortable with an Outperform call and $8 price target, which would mean a 70%-plus improvement by this time next year.

The four analysts covering LLNW that have sounded off over the past three months have all been in agreement, rating it a Buy. Its 60% potential upside, implied by their average price target, puts Limelight near the tippy top of these growth stocks to buy. Check out other analyst ratings and targets on TipRanks.

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Market value: $3.4 billion

TipRanks consensus price target: $45.33 (63% upside potential)

TipRanks consensus rating: Strong Buy

BridgeBio Pharma (BBIO, $27.77) is developing a wide array of clinical-stage therapies for genetic diseases. And the company has received several Buy calls following its most recent quarterly update.

Mizuho Securities analyst Salim Syed (Buy, $51 PT), who explains to investors that “financials … aren’t important here; timelines and data are the focus,” points out that the main update of note had to do with BBIO’s subsidiary, and its Phase 1/2 study evaluating BBP-589 in recessive dystrophic epidermolysis bullosa (RDEB). RDEB is caused by a genetic mutation, with patients often experiencing widespread blistering and skin erosions.

BBP-589 isn’t necessarily considered to be a huge revenue driver; Syed is calling for end-user peak sales of $250 million. But the data readout was encouraging and could help increase the probability of success.

Investors originally expected more data to be published in 2020, but COVID-19 and the addition of a fourth cohort has pushed back other readouts until 2021 Syed is unphased by the delay, however, writing, “The more important thing here is the initial data. While we don’t have anything quantitative yet, the dose-dependent increase in collagen 7 skin deposition is a positive.”

Piper Sandler analyst Tyler Van Buren (Overweight, no PT) also said he was “encouraged” by data from affiliate QED Therapeutics’ infigratinib, which is being tested for both urothelial carcinoma and cholangiocarcinoma.

A modest group of seven analysts have written about BBIO over the past three months, but each has issued a Buy-equivalent rating. Meanwhile, their average price target of $45.33 implies this growth stock can churn another 63% higher from here. Discover what the rest of the Street has to say about BridgeBio.

Maya Sasson is a content writer at TipRanks, a comprehensive investing platform that tracks more than 5,000 Wall Street analysts as well as hedge funds and insiders. You can find more of their stock insights here.

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