Are you looking to buy a new home or refinance at a lower rate? The media is talking about rates being higher for longer. And they are correct about short-term rates that don't impact mortgages as much as longer-term yields do. While the Fed plays political games to garner votes with short-term rates, the long-term yields that the Fed does not control have a seasonal pattern that typically results in lower yields. Understanding this seasonal pattern could save consumers thousands of dollars. When can we expect to see lower yields?
The stock price of Novavax (NASDAQ: NVAX), a Covid-19 vaccine developer, trades at $13 per share, about 96% below its peak level of $320 seen in February 2021. NVAX stock was trading at around $51 in early June 2022, just before the Fed started increasing rates, and is now 7
BlackRock’s stock (NYSE: BLK) has given negligible returns YTD as compared to the 11% rise in the S&P500 index over the same period. Further, at its current price of $816 per share, the stock is trading 11% below its fair value of $914 – Trefis’ estimat
Given its better prospects, we believe DexCom stock (NASDAQ: DXCM) is a better pick than 3M stock (NYSE: MMM). Although these companies are from different sectors, we compare them because of their similar market capitalization of around $50-60 billion. Investors have assigned a h
Ford stock (NYSE:F) has been a weak performer this year, rising by just 1% year-to-date, compared to the broader S&P 500 which has gained close to 11%, amid concerns of a slowing automotive market.However, Ford’s recent performance has been reasonably strong. The automa
New indicators of a cooling economy eased inflation concerns, driving the
S&P 500 to record highs last week. The index, which dropped around 4% in April, is now up 11% for the year.
Will this momentum continue? Savita Subramanian, head of US Equity and Quantitative strategy at Bank of America, believes it will. She’s taking an upbeat stance on the current market outlook, and backs it with a look at long-term results from the past 300-plus quarters. “20 were recessionary, 13 were stagflationary, and 90% of the time things were OK,” Subramanian noted.
In practice, Subramanian’s outlook leads her to bang the drum for long-term shareholding, and she advises investors to eschew timing the market. In her words, “‘Time in the market beats timing the market’ is an old but prescient adage. The risk of losing money in equities plummets as time horizons extend, a phenomenon unique to equities vs. other asset classes. Best days usually follow worst days, and missing those best days is costly: since the 1930s, missing the 10 best S&P 500 days per decade would have yielded a paltry gain of 66% vs. ~23,000% from remaining invested.”
Subramanian’s colleagues among the Bank of America stock analysts are running with this positive outlook, and are advising investors to buy two stocks in particular. Both have solid upside potential – as much as 200% in one case. According to the
TipRanks databanks, both stocks get a ‘Strong Buy’ rating from the broader analyst consensus, too; let’s take a closer look and find out why they are primed for gains.
Sutro Biopharma
(
STRO
)
The first Bank of America pick we’ll look at, Sutro Biopharma, is a clinical-stage medical research company with a strong oncological focus. The company is committed to developing new medicines to treat the unmet needs common in many cancers; Sutro is pursuing this goal by developing a research pipeline composed of drug candidates with improved therapeutic profiles.
To meet this goal, Sutro has first developed a proprietary technology platform, dubbed XpressCF. The company has recognized an inherent limitation in most drug candidate creation – that the compounds, especially the proteins, are created using existing lines of living cells. Because these cells must be intact and functioning, there are some molecules they cannot produce, and the production methods can be cumbersome.
Sutro’s XpressCF platform uses cell-free technology, using an extract of the cellular components that produced proteins. This novel platform technology allows Sutro to produce ‘single proteins at g/L yields in 8-10 hours at any scale,’ and form them into new drug candidates. Using its platform, Sutro can develop compounds as varied as small peptides and monoclonal antibodies.
The leading drug candidate in Sutro’s pipeline is STRO-002, also called luveltamab tazevibulin, or luvelta for short. This new therapeutic agent has shown promise in early testing against ovarian cancer, and is currently undergoing a Phase 2/3 study, called REFRαME-O1, in the treatment of platinum-resistant ovarian cancer (PROC). The trial has two portions, a dose optimization portion that is fully enrolled with 50 patients, and a randomized registration-directed trial, Part 2, that was opened for enrollment in April. Part 2 of this trial, the Phase 3 portion, is expected to enroll up to 500 patients.
For Bank of America’s analyst Tazeen Ahmad, this company’s potent combination of a high-potential drug candidate and an equally high-potential development platform is too attractive for investors to pass up. She writes of the drug candidate, “We think that luvelta has the potential to treat up to 80% of PROC patients, a significant improvement over the ~30% eligible for AbbVie’s Elahere (approved FolRα ADC). While we do not model all eligible patients getting the drug, we think that luvelta represents an attractive commercial opportunity in PROC, with potential to expand into other high-unmet-need oncology indications… We currently model risk-adjusted peak sales for luvelta in PROC of $597mn.”
Going on, Ahmad explains how Sutra’s development platform is another solid asset: “To date, STRO’s differentiated approach has generated strategic partnerships with prominent names including Astellas, Merck, Ipsen, and Bristol Myers Squibb. We note that these partnerships will be integral to the company continuing to maximize the reach of its XpressCF platform and innovative product candidates in areas of high unmet need.”
Together, these assets back up Ahmad’s Buy rating on STRO, and her $12 price target points toward a robust one-year upside potential of ~199%. (To watch Ahmad’s track record,
click here)
Overall, the Strong Buy consensus rating on STRO is based on 10 recent analyst reviews, including 9 Buys and 1 Hold. The shares are selling for $4.01 and their $11.44 average price target suggests that the stock will gain 185% in the next 12 months. (See
STRO stock forecast
)
Avidity Biosciences
(
RNA
)
The second stock on today’s list is another biotech, Avidity Biosciences. This company is focused on the development of targeted RNA therapeutic agents, and has set up its own proprietary development platform to achieve this. The platform, called Antibody Oligonucleotide Conjugates, or AOC, is described as having a ‘broad and disruptive potential, and the company has already put a portfolio of muscle disease programs into the research pipeline.
Genetic diseases are particularly difficult to treat, and at the same time have a deep impact on patients’ lives – making the development of new therapeutics an urgent need. Avidity’s AOC platform lets the company design and engineer drug candidates that offer both the tissue selectivity of monoclonal antibody treatments and the precision of oligonucleotide-based drugs in a move that promises to redefine RNA therapeutics. The resulting drug candidates have potential to more effectively target the underlying genetic causes of many diseases.
So far, Avidity has used its platform to put three RNA therapeutics into the clinical trial pipeline. These candidates are intended to target the specific genetic root cause of three rare muscle diseases, each of which has proven untreatable with previously available RNA therapies. The company has already had some success in its research program, and has made the first-ever reported successful targeted delivery of RNA into muscle tissue. This early success underlies its three clinical programs for myotonic dystrophy type 1 (DM1), Duchenne muscular dystrophy (DMD), and facioscapulohumeral muscular dystrophy (FSHD).
The DM1 track, featuring drug candidate AOC-1001, is the most advanced. The drug, dubbed delpacibart etedesiran and abbreviated as del-desiran, showed reversal of disease progression in multiple functional measures in early testing – an important achievement for a drug targeting an often fatal neuromuscular disease that lacks any current approved treatment. Avidity will be initiating a global Phase 3 trial of AOC-1001, HARBOR, during the current quarter.
A second drug candidate, AOC-1044, was in February granted Rare Pediatric Disease Designation by the FDA for the treatment of DMD44. The company will release 5 mg/kg cohort data from the Phase 1/2 EXPLORE 44 study of AOC-1044 in people living with DMD44 during the second half of 2024.
The company’s third clinical-stage drug candidate, AOC-1020, is a treatment for FSHD. Avidity is on track to present preliminary data from approximately half of the patients participating in the Phase 1/2 FORTITUDE clinical trial of the drug candidate. This data release is expected during this quarter.
Those are some significant ‘shots on goal,’ and have caught the attention of analyst Geoff Meacham. In his coverage of this company for Bank of America, Meacham lays out an optimistic stance: “We think RNA stands to benefit from robust demand for its innovative AOC therapies and estimate peak adjusted sales of $2.3B by 2033 from the company’s rare muscle disorder portfolio (AOC 1001 in DM1, AOC 1044 in DMD amenable to exon 44 skipping, and AOC 1020 in FSHD). With an innovative platform and a path to commercialization as early as 2026, we view RNA as an attractive risk-reward opportunity.”
Looking ahead, the analyst rates RNA shares as a Buy, and his $40 price target indicates room for an upside potential of 35.5% on the one-year horizon. (To watch Meacham’s track record,
click here)
A bullish take is no outlier here; RNA stock has 7 unanimously positive analyst reviews behind its Strong Buy consensus rating. The stock is currently trading for $29.50 and has an average price target of $42.67, for a 45% upside potential this coming year. (See
RNA stock forecast
)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’
Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
"Sell in May and come back after Labor Day" is a well-known adage in the stock market that suggests investors should sell their stock holdings in May and return to the market after Labor Day in September. But, like so many market clichés, sayings that aren't supported by historical data are meaningless. An example is the upcoming Nasdaq seasonal buy with a perfect historical 15-year record. Will 2024 be the 16th year?
Forget about Gamestop (
NYSE:GME
) and AMC Entertainment (
NYSE:AMC
). Robinhood Markets stock is the picks-and-shovels way to invest in the resurgence of meme stocks.
With
meme stock mania seemingly heating back up, investors are eyeing shares of some of 2021’s big meme stocks again. But rather than chase shares of a specific meme stock, the smart way to invest in the theme of retail investors piling back into the market is to invest in Robinhood Markets, which will continue to benefit from the influx of retail investors and increased trading volume.
In this sense, Robinhood can be thought of as the picks-and-shovels way to play a return of retail activity. Unlike Gamestop or AMC, I believe it’s a great stock in its own right and doesn’t need any short squeeze to head higher.
I’m bullish on Robinhood stock based on its excellent user and deposit growth, its positioning as a picks-and-shovels play on increasing activity from retail investors, and its successful foray into new areas like IRAs and credit cards. The latter initiative is transforming Robinhood from a retail brokerage to a comprehensive financial powerhouse.
Meme Stock Reawakening
As you’ve likely seen by now, a Tweet from Keith Gill, aka Roaring Kitty, the ringleader behind Gamestop’s massive 2021 rally that set off the original “meme stock” mania, marked his return to the platform after a multi-year hiatus. Many investors took this as a signal to rush into Gamestop and other meme stocks of that era, sending shares of these stocks on a wild ride this week.
However, most of these investors would admit that this is a troubled company with less-than-promising long-term prospects, and the stock has considerable downside risk. For example, the
GME stock’s price target of $7 shows that even after the recent pullback, the stock still has downside potential of 68.5% (see below). Meanwhile, Robinhood is a thriving, growing business with a bright future.
Picks-and-Shovels Play
As the go-to brokerage app for many new investors and retail investors, Robinhood is well-positioned to capitalize on an influx of new traders and a spike in trading activity. Currently, Robinhood is the #11 finance app in Apple’s App Store, trailing everyday payments apps like Cash App and Venmo but leading the likes of Fidelity, Charles Schwab (
NYSE:SCHW
), and Wells Fargo (
NYSE:WFC
), a considerable achievement for the much smaller company.
Robinhood recently released updated metrics for April, showing that business is booming. An impressive 90,000 customers opened accounts during the month, meaning that Robinhood now has 24 million customers. Robinhood also took in $4.9 billion in deposits. This represents a 45% annualized growth rate versus March. With this influx, the company has now taken in $27.4 billion in deposits over the last 12 months, representing 35% annualized growth versus April 2023.
And keep in mind that these numbers are from before the meme stock resurgence kicked off in May. As more retail investors return to the market or are drawn to the market for the first time by news of the wild swings of meme stocks, Robinhood’s user and deposit growth should continue.
This growth
prompted Bank of America Securities to give Robinhood a double upgrade from Underperform to Buy, based on “(1) rising retail engagement and accelerating organic growth; (2) positive operating leverage after large expense reductions; (3) attractive valuation following increases in EBITDA/EPS.” Bank of America increased its price target on Robinhood from $14 to $24.
Beyond meme stocks, Robinhood has made great progress in building the platform, expanding into new areas, and becoming a true financial ecosystem for its users.
Attacking New Verticals
This isn’t the same old Robinhood that it was in 2021 during the last meme stock frenzy. I previously covered
Robinhood and its underrated transformation into a full-service financial ecosystem several months ago, and the stock has performed well since then. Robinhood launched IRAs last year and has made an aggressive move into the market by offering a 1% match on rollover deposits and a 3% match on deposits for Robinhood Gold members.
These maneuvers are helping it attract customers from its competitors. CEO Vlad Tenev says that the first quarter was the second quarter in a row in which the company had “net asset inflows from every other major brokerage — totaling $3 billion, more than twice our Q4 level.”
Robinhood is also making a splash in the credit card market with the launch of its upcoming Robinhood Gold card, which will be one of the offerings within its Robinhood Gold subscription service.
The eye-catching gold card, which is made of stainless steel and weighs in at 17 grams, offers users unlimited 3% cash back on all purchases. Tenev says that over one million customers have signed up for the Gold card waitlist and stated, “We can substantially grow Gold adoption as we roll out the card.” The card could be a major growth driver for Robinhood Gold membership, as only half of the people on the waitlist are current Gold subscribers.
Tenev says that Robinhood Gold subscribers hit 1.7 million during the first quarter after 260,000 new customers signed up. With these new offerings, Robinhood is smartly leveraging its success with retail investors in its brokerage business to move into new verticals, increase wallet share with its customers, and capture further growth.
Is Robinhood Stock a Buy, According to Analysts?
Turning to Wall Street, HOOD earns a Hold consensus rating based on four Buys, eight Holds, and four Sell ratings assigned in the past three months. The
average HOOD stock price target of $20.86 implies 3.8% upside potential.
The Takeaway: An Up and Coming Financial Powerhouse
Rather than chasing after a stock like Gamestop during this meme stock revival, Robinhood could potentially be the best way to invest in a resurgence of retail investor activity. I’m bullish on Robinhood because of the strong user growth and deposit growth it has already demonstrated this year and because it’s well-positioned to capture further growth as more retail investors foray into the market.
Additionally, the company’s expansion into lucrative verticals like IRAs and credit cards and its momentum in these areas have the potential to transform it from a retail brokerage into a true financial powerhouse over time. This makes it an attractive long-term investment opportunity, in my view.
Disclosure
Warren Buffett has been spending billions of dollars in buying Berkshire Hathaway shares, even while being a net seller of stocks. Is Berkshire a value stock worth buying now?
More than half of Japan's largest companies have announced plans to raise their dividends in the current fiscal year. The announcement of share buybacks is also at an all-time high, as firms announced $7.7 billion worth of share buybacks in April - a record for the first month of a fiscal year. This is all part of the normalization of both Japan's economy and corporate behavior, and it's a moneymaking trend for investors.
Investors are highly anticipating Q1 earnings from Nvidia NVDA next week with the broader indexes printing fresh highs fueled by reassuring inflationary data in April.
Zacks
Checked
15 minutes 43 seconds ago
This feed is responsible for generating the rss feed related to the topic Stocks