Just when it looked like time to throw in the towel, the market pulled through and delivered a win. Ending January and going into February, the S&P 500 has racked up three consecutive days of gains, for a substantial rally that has investors giving a sigh of relief going forward.
However, some Wall Street pros are still concerned that the volatility we have witnessed over the past weeks will increase in the months ahead. In this environment, investors are going to gravitate toward stocks that have proven records of strong share price appreciation. While we all know that past performance won’t guarantee future results, the best place to start looking for tomorrow’s high-growth stocks is among yesterday’s winners.
Using TipRanks’ database, we’ve found three ‘monster growth’ names that saw hefty gains over the past 12 months. Each name is well-loved by Wall Street analysts, and has received enough bullish calls to score a “Strong Buy” consensus rating
Targa Resources (TRGP)
We’ll start with Targa, an energy midstream company. The midstream segment is the vital ‘connector’ in the energy sector; midstream companies move the crude oil and natural gas products from the wellheads to the storage farms and refineries. To do this, Targo, which operates in the natural gas sector, controls a wide-ranging network of assets, mainly across the Texas-Oklahoma region. The company’s assets include natural gas pipelines, gas plants and fractionators, and terminal and gathering facilities, and export facilities on the Gulf Coast of Texas and Louisiana.
Targa’s stock has gained an impressing 111% over the past 12 months, outperforming the broader market by far. The company has also been reported rising revenues; with one ‘blip’ in 2Q21, Targa reported sequential top-line gains in every quarter since coming out 2Q20’s ‘corona recession.’ The 3Q21 result, the last reported, of $4.45 billion, was more than double the year-ago result. Net income was reported at $160.4 million, more than 4x higher than the 3Q20 figure, and the company has an adjusted free cash flow of $297 million.
The gains reflect increased business as the economy reopens and fossil fuel producers boost production to meet new demand. Targe used the bump in revenue, income, and cash flow to increase its dividend, from 10 cents per common share to 35 cents. At an annualized rate of $1.40, this yields 2.3%, about 15% higher than the average dividend found among S&P-listed companies.
Covering the stock for JPMorgan, analyst Jeremy Tonet sees Targa in a position to continue showing gains – and to continue delivering those gains to shareholders.
“Strong commodity prices support QoQ EBITDA growth, despite declines in the back half of the quarter…. We remain very positive on TRGP’s improving financial outlook, rapid deleveraging and prospects for increased capital return to shareholders in 2022. With DevCo assets purchase in the rear view, we note share buybacks and steady preferred equity repurchases appears next on the list… With an integrated Permian wellhead to export value chain, NGL operating leverage, direct commodity price uplift, visibility to deleveraging and increased shareholder returns, we reaffirm TRGP as our top pick,” Tonet wrote.
To this end, Tonet rates TRGP shares an Overweight, or a Buy, while his $80 price target implies ~32% upside potential by the end of 2022. (To watch Tonet’s track record, click here)
The unanimous Strong Buy consensus rating here, based on 12 recent stock reviews, shows that Wall Street shares the bullish mood toward Targa. The stock is selling for $60.73, and its $70 average price target indicates potential for a 15% one-year upside. (See TRGP stock forecast on TipRanks)
Daseke, Inc. (DSKE)
The second stock we’ll look at is a logistics company, part of the supply chain system that has gotten so much press lately. Daseke is primarily a trucking holding company, and through its subsidiaries it owns, controls, and operates an impressive array of transport assets: 4,500 tractors, 11,000 flatbed and specialized trailers, and well over 1 million square feet of warehousing space. Daseke focuses its operations on the industrial trucking industry.
The supply chain crisis has led to higher shipping and freight rates, and that has helped to support companies like Daseke. In its recent 4Q21 report, Daseke revealed a top line of $394.3 million, up ~17% year-over-year. EPS came in at 9 cents per share, flat yoy but down sharply from the 30 cents reported in the prior quarter. Total net income, however, was up year-over-year, from $6.1 million to $7.1 million.
These results beat the expectations. The Street had forecast $335.6 million as the top line; Daseke beat that by 17%. On EPS, the Street had expected only 7 cents; the company’s 9 cent result was 28% better. For the full year 2021, Daseke reported a record profit of $56 million, and is predicting continued gains in 2022.
Since the earnings release, Daseke shares have jumped 21%. Overall, for the past 12 months, the stock is up a robust 119%.
Cowen analyst Jason Seidl, rated 5 stars by TipRanks, notes several important points that bolster Daseke’s share price: “Strong freight rates drove profitability in the quarter despite cost pressures playing out across the transport network. A first look into ’22 outlook is above the consensus figure and in-line with our estimates… the first 25 days of Q1 are off to a very strong start, and we are encouraged at the potential for 2022, acknowledging management’s recurring theme of outperforming against initial guidance.”
These comments back up his Outperform (i.e. Buy) rating on the shares, and his $15 price target suggests it has room for ~31% growth ahead. (To watch Seidl’s track record, click here)
Seidl is not alone in his bullish stance; all three of the recent reviews here are positive, for a Strong Buy consensus rating on the stock. Daseke shares are priced at $11.48 for now, with an average price target of $13.50 indicating an upside of ~18% over the next 12 months. (See DSKE stock forecast on TipRanks)
Sierra Oncology (SRRA)
We’ll wrap up with Sierra Oncology, a clinical-stage biopharmaceutical company researching targeted therapeutic agents for the treatment of rare cancers. Sierra has an active research pipeline, with three drug candidates targeting heme malignancies and solid tumors in Phase 1 trials, and one more advanced candidate, momelotinib, which is currently completing a Phase 3 pivotal trial as a monotherapy and has a Phase 1 trial, as a combo therapy, planned for the first half of this year.
The big news, however, comes from the Phase 3 trial, styled MOMENTUM. This trial evaluated momelotinib as a monotherapy for myelofibrosis, a rare cancer of the blood-producing sections of the bone marrow. On January 25, the company released topline pivotal data from the MOMENTUM trial, and the stock jumped 84% in the next two sessions. This accounts for the bulk of SRRA’s total share gain of 95% for the past 12 months.
A strongly positive tilt to the data prompted the stock’s surge. Sierra announced that the Phase 3 trial met all of its primary and secondary endpoints, and showed clinically significant benefits in the amelioration of symptoms, including anemia and spleen size. Full data from the study will be released at ‘an upcoming medical meeting.’
What has investors so excited, however, is the profit potential here. Sierra bought licensing rights to this drug candidate from Gilead in 2018, for an up-front payment of just $3 million; the total addressable market for this indication may support a peak sales figure of $500 million for momelotinib. Sierra plans of following up the data release with a New Drug Application (NDA) to the FDA in 2Q22.
Among the fans is Cantor analyst Brian Cheng who writes: “The overall MOMENTUM dataset, in our view, is robust and provides strong validation to use MMB in MF. Noting the lack of effective and approved therapy in the second-line, we believe MMB has an attractive value proposition and will see adoption in a meaningful segment of the MF market. We await additional color on the results and next steps from the company…”
Assuming positive developments stemming from this clinical trial, Cheng rates SRRA shares an Overweight (i.e. Buy) and sets a price target of $39, implying room for ~31% upside. (To watch Cheng’s track record, click here.)
For now, at least, Wall Street doesn’t see a downside here. The stock’s Strong Buy consensus is based on a unanimous 4 reviews, and the average price target of $44.75 is even more bullish than Cheng’s, and indicates potential upside for ~5`1% one-year upside. (See SRRA stock forecast on TipRanks)
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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.
