Growth is the name of the game, of course; it’s the surest way for investors to get the returns they demand. And from a growth perspective, last year was a banner year. The three main indexes – the Dow Jones, the S&P 500, and NASDAQ – all finished the year with strong gains, ranging from 22% on the Dow to the NASDAQ’s 35%.
We’re seeing that brisk growth continue this month, as the indexes are starting 2020 with gains between 2.8% and 4.6%. Even with some obvious headwinds brewing – the chaos of a U.S. presidential election year with a deeply polarized electorate –for now it looks like the markets are going to keep on trucking.
We all know that past performance won’t guarantee future results. Still, the best place to start looking for tomorrow’s high-growth stocks is among yesterday’s winners. We’ve found three stocks that ended 2019 with hefty gains and put them side-by-side in the Stock Comparison tool from TipRanks. Here are the results.
MasTec, Inc. (MTZ)
We’ll start in the heavy industry sector, with a Florida-based leader in oil and gas, engineering, and construction. MasTec has been a fixture of the construction sector for over 20 years, and today is a $4.9 billion giant. Despite a slight slip in share prices during December, MTZ finished 2019 with an impressive overall appreciation of 57%.
The impressive share gains are bolstered by a strong financial performance. MTZ last reported earnings at the beginning of November, and easily beat the EPS forecasts and the year-ago numbers. For revenue, MTZ reported $2.02 billion, which missed the forecast but was still up 2% year-over-year. The EPS number was better; at $1.73 it beat the estimate by 6% and the year-over-year number by 30%. Q3 was the fourth quarter in a row that MTZ beat the earnings forecast.
Deutsche Bank analyst Chad Dillard is bullish on MTZ, seeing the company as well-positioned to continue its growth run. He writes, “Similar to 2Q, the earnings outperformance was rooted in oil and gas profitability, with segment margins ~530bps ahead of plan. Importantly, the company provided encouraging commentary on 2020, targeting low-double-digit sales growth… we remain constructive on shares, as the company is well-positioned to drive meaningful growth across its end-markets in ’20 and has continued a trend of outperforming expectations, not to be taken for granted in a challenging macro environment.”
Dillard gives this stock a Buy rating with a price target of $77, suggesting strong continued gains, approaching 21% in the coming months. (To watch Dillard’s track record, click here)
Overall, MTZ shares get a Strong Buy from the analyst consensus, based on 11 ratings, including no fewer than 10 Buys. Shares are selling for $63.75, and the average price target of $76.45 implies an upside potential of 20%. (See MasTec stock analysis on TipRanks)
Biohaven Pharmaceutical Holding Company, Ltd. (BHVN)
Our second pick today is a clinical-stage biotech. It’s common for biotech companies to operate at an earnings loss – they inhabit a niche with enormous overhead and exceedingly long lead times for new products. However, when new products do hit the market, new clinical trials start, or rumors spread of buyout possibilities, it’s not uncommon to see the shares spike. Biohaven has been the subject of such rumors since last spring, and despite high volatility, ended 2019 with a 48% gain.
The company focuses its research mainly on drugs to treat migraines. This is a highly profitable space, but it does require a large salesforce right at the start. That need fed rumors that Biohaven was attracting buyers – rumors which turned out to be false. The company did, however, put out a secondary stock issue to raise capital, a move that raised over $322 million in new capital, despite temporarily depressing the share price. Gains so far in January have been modest, at nearly 3%.
The company has excellent prospects moving forward, too, as its Rimegepant drug has recently shown positive Phase 3 trial results. Rimegepant is Biohaven’s lead product candidate, and a positive late-phase trial result will help bolster its approval application.
Piper Sandler analyst Tyler Van Buren looks at Rimegepant through a broader lens, and sees general market reasons for a bullish stance on both the drug and the company. He notes that two competitors – Allergan and AbbVie – have received approval for a new drug in the same class as Rimegepant. The approval did not contain a warning about liver toxicity, and Van Buren sees this as a good sign for the drug class. He writes, “[T]his clearly bodes very well for the class as a whole and Biohaven’s rimegepant, which had even cleaner safety and tolerability data.”
Van Buren set a $100 price target on BHVN to back his Buy rating. That target indicates an impressive 79% upside potential. (To watch Van Buren’s track record, click here)
Biohaven holds a Strong Buy consensus rating from the analysts, and it is unanimous. The rating is based on 7 Buys set in the last three months. The $78 average price target suggests an upside growth potential of 39% in the next 12 months. (See Biohaven stock analysis on TipRanks)
Repay Holdings Corporation (RPAY)
The final stock on today’s list presents an interesting case. Repay is holding company whose subsidiaries operate in the financial sector, primarily as fintech and payment processing providers. The company did not actually trade through the first half of 2019, as it was engaged in merger activity, joining with acquisition company Thunder Bridge.
The transaction completed in early summer, and the company announced August 2 that RPAY shares had been reinstated on the NASDAQ index. Between the last week in July, when RPAY shares resumed active trading, and December 31, the stock showed a steady gain, finishing the year up 25%. RPAY has kept the pace in January, gaining another 9% so far this month.
Repay reported Q3 earnings of 18 cents per share in November. That number was based on $19.4 million in gross profit, a 39% year-over-year gain. The company posted a total card payment volume of $2.6 billion, up 40% from the year before. Clearly, Repay’s merger activity and temporary halt in trading did not harm the company’s business.
5-star analyst Mark Palmer, of BTIG, agrees, writing of the stock, “[S]hares of RPAY have appreciated by almost 41% in just over five months, we believe the stock still has ample upside, especially when considering the potential impact of a couple of acquisitions executed during 2H19 that provided the company with its own back-end payment processing platform and added the B2B payment vertical to its mix.”
Palmer’s $20 price target on RPAY is in-line with his confidence in the stock – it implies an upside of 25% to the shares and backs up his Buy rating. (To watch Palmer’s track record, click here)
RPAY also has a unanimous Strong Buy consensus rating, based on 5 Buys given in the past month. The average price target, $19, indicates room for a 19% upside from the current trading price of $15.97. (See Repay stock-price forecast on TipRanks)