Bull or bear market, no investment is a sure thing. Especially in the current financial environment, which remains riddled with uncertainty, finding compelling plays can be challenging for even the most seasoned market watchers. COVID-19 and the lockdowns it triggered have changed the rules of the game, so traditional investing strategies may not be as reliable as they once were. This is where a more comprehensive stock analysis can come in handy.
Investing.com has a tool that does just that. Building on six key factors like analyst ratings, hedge fund and insider activity, the Investing Insights collates all of this data and assigns each stock a score ranging from 1 to 10, that indicates where a particular name might be headed.
Using Investing Insights, we found three stocks boasting a “Perfect 10” Smart Score. Adding to the good news, these Buy-rated tickers offer substantial upside potential and won’t break the bank, with each trading for less than $10 per share.
Rada Electronics (RADA)
First on our list of Perfect 10’s we have Rada Electronics (NASDAQ:), a high-tech defense industry contractor specializing in avionics, navigation systems, and tactical radars. There’s an old saw that no one ever went broke selling weapons; while Rada’s defense-industry oriented products are not technically weapons, at the height of the coronavirus pandemic, from March through May, Rada did announce over $35 million worth of new product orders.
New products orders were not the only good news the company saw during the corona crisis. The company also, on March 10, reaffirmed its 2020 full-year guidance, stating that “The coronavirus pandemic has not materially impacted business to date.” More than two-thirds of the new orders came after that announcement. Rada shares made a strong rebound after the market collapse, and are up 14.3% from pre-collapse levels – and are still trending strongly upwards.
The market’s smallest participants, sadly, don’t get as much analyst coverage of the giants – and RADA has a market cap of just $277 million. However, this company has still attracted attention from one Wall Street’s best analysts. Kenneth Herbert, of Canaccord, rates 5-star from TipRanks and is ranked in the top 2% of all analysts.
In his comments, Herbert lays out why he believes that RADA is likely to survive potential near- to mid-term defense budget cuts: “RADA is already thinking ahead to a new DoD acquisition cycle roughly 12-18 months in the future, with several more sophisticated tactical radars in development. Management hopes that by getting out in front of the next procurement cycle with a series of next-gen tactical radars, they will be able to maintain their strong incumbent status.”
To this end, Herbert rates RADA a Buy along with an $8 price target, which suggests a 19% upside from current levels.
Turning to RADA’s Smart Score, we find that two highly positive factors strongly outweigh all the others. The analyst consensus is to buy this stock while the financial bloggers agree. They are usually a contentious lot, but on Rada, they 100% unanimous in their bullish sentiment. (See RADA stock analysis)
RADA Smart Score
Veru Inc. (VERU)
Operating as an oncology and urology company, Veru (NASDAQ:) develops cutting-edge medicines for the prostate cancer continuum of care and urology specialty pharmaceuticals. At $3.20, several members of the Street believe that its share price presents investors with a unique buying opportunity.
Among Veru’s fans is Oppenheimer’s Leland Gershell. The 5-star analyst notes that its VERU-111 candidate is a major component of his bullish thesis, highlighting the fact that it has already demonstrated “compelling efficacy signal in advanced prostate cancer as well as reasonable safety.”
Expounding on this, Gershell stated, “As we highlighted last week, biomarker declines, tumor responses, interim durability of benefit, and manageable systemic toxicity seen in dose-escalating study in chemo-naïve metastatic castration-resistant prostate cancer (mCRPC) patients continue to pique our interest in this novel anti-tubulin with a urologist-friendly profile.” The enrollment for Phase 2 is up and running, and the company is planning a Phase 3 trial of the candidate in novel androgen blocker failures.
That being said, VERU-111’s potential goes even further. Management announced that it would be kicking off a Phase 2 study of the therapy in COVID-19 patients with a high risk of ARDS. Citing the “precedent of anti-viral and anti-inflammatory activity seen with compounds that target the microtubule colchicine binding site”, Gershell is optimistic about VERU-111’s use in this indication.
Adding to the good news, Gershell sees even more potential catalysts ahead. Veru is gearing up for the Phase 2 program evaluating differentiated GnRH antagonist, VERU-100, in hormone-sensitive prostate cancer next quarter, as well as zuclomiphene’s Phase 3 trial for hot flashes in androgen deprivation therapy, which is set to begin late this year. The TADFIN NDA submission could also come at the end of 2020 or early 2021.
“With a ~$260 million enterprise value, an intriguing prostate cancer pipeline offering multiple shots on goal, and a growing commercial business supporting R&D, we view VERU as attractive,” Gershell concluded.
As a result, Gershell rates VERU an Outperform (i.e. Buy) along with a $9 price target. This target conveys his confidence in Veru’s ability to soar 180% in the next year.
All in all, other analysts echo Gershell’s sentiment. 4 Buys and no Holds or Sells add up to a Strong Buy consensus rating. Given the $8.50 average price target, the upside potential comes in at 166%. (See Veru stock analysis)
VERU Smart Score
scPharmaceuticals Inc. (SCPH)
Hoping to improve the lives of heart failure patients and reduce healthcare costs, Scpharmaceuticals (NASDAQ:) is working on advancing an outpatient therapy to manage diuresis. Currently going for $8.40 apiece, the share price could present investors with the chance to get in on the action.
Recently, SCPH updated investors on the progress of its planned Furoscix NDA resubmission, which is slated for mid-2020. Critical function reliability testing wrapped up with device validation. This includes shipping, drop and temperature, with excursion testing also almost completed.
Representing H.C. Wainwright, 5-star analyst Douglas Tsao highlights the fact that “initial time points for needed drug stability testing have been successfully completed with just one measurement remaining.” He added, “In December, the company disclosed it successfully completed the needed human factors validation studies, which, in our view, represented the most significant milestone in addressing FDA’s concerns.”
After a PDUFA date is handed out, management will kick off pre-commercial activities. Adapting to the limited face-to-face environment caused by COVID-19, SCPH will use a “coming soon” promotional strategy leveraging digital channels and internet advertising, with a focus on broad promotion for at-home use by patients.
Speaking to the candidate’s potential, Tsao noted, “Management noted it recently completed a market research survey in which respondents unanimously agreed that decreased oral diuretic bioavailability is an impediment to the effective treatment of heart failure (HF), supporting the in use-case for Furoscix.”
Going even further, Tsao points out that COVID-19 has made it essential to keep patients out of the hospital to prevent the more vulnerable from contracting the virus as well as maintain resources. “Furoscix, offers the potential to keep these patients out of hospitals by allowing self-administration of diuretics at home and with ease. The rapid adoption of telemedicine should facilitate use of Furoscix even when Covid-19 subsides since doctor visits can be burdensome for this patient population, especially since they generally need a caregiver to accompany them,” he explained.
Based on all of the above, it’s no wonder Tsao reiterated his Buy recommendation. Along with his bullish call, he bumped up the price target from $13 to $15, implying shares could climb 79% higher in the next twelve months.
Turning now to the rest of the Street, it has been relatively quiet when it comes to other analyst activity. Only two other ratings were issued recently, a Buy and a Hold, so the consensus rating is a Moderate Buy. With a $13 average price target, the upside potential lands at 55%. (See SCPH stock analysis)
To find more ideas for stocks trading at attractive valuations, visit Investing Insights.