Watching the economy today is a bit like watching an evenly matched game of tug-of-war. There are two teams, pulling hard in opposite directions, and it’s a coin toss which will win. In our economic situation, we have sets of tailwinds and headwinds, promising further gains or a possible losses, and investors are caught in the middle.
On the bullish side, we can take a cue from Oppenheimer’s chief investment strategist John Stoltzfus, who says bluntly: “So far this year the good news on economic growth, jobs growth, and earnings and revenue growth has offset negative overhang from the pandemic and its variants, a slowing in vaccination momentum, inflation risks and domestic and geopolitical tensions.”
Stoltzfus sees the opposite pulls on the economy causing an increase of volatility within an overall upward trend, writing that we’ll “see equities move higher by year-end,” but adding that the volatility brings with it the chances of pullbacks – and opportunities for the bears as well as the bulls. Whether you want to get in the market for the long haul, or take your profits now, Stoltzfus believes you’ll have plenty of chances in the next four months.
Taking Stoltzfus’ outlook into consideration, Oppenheimer’s analysts are pounding the table on three stocks, noting that each could double or more in the next year. Using TipRanks’ database, we found out that the rest of the Street is also on board, as each boasts a “Strong Buy” consensus rating.
Enovix (ENVX)
We’ll start in a sector necessary for today’s high-tech economy, the humble electric storage battery. Enovix is a developer and producer and advanced silicon-anode lithium-ion batteries, with a proprietary architecture to maintain a high life cycle with increased energy density. The company has its manufacturing facilities in the US, and is advancing on two separate tracks: batteries for computing industry customers, and for the automotive suppliers in the electric vehicle (EV) field
This stock is new to the public markets, having entered the NASDAQ index just last month through a SPAC merger with Rodgers Silicon Valley Acquisition Corporation. The merger was completed on July 14, and the ENVX ticker made its debut the next day. The merger brought $405 million in gross cash proceeds to Enovix, which the company will use for the build-out of its first two production facilities. By setting up two factories at once, the company plans to continue EV battery cell development while meeting commitments to computing industry clients.
While this is a new company, it’s establishing itself in an essential niche, and has solid prospects. In recent weeks, it has signed a contract to supply 3D Silicon Lithium-ion batteries to the US Army, for wearable power sources needed for worn and carried equipment. Enovix sees a $350 million opportunity in the US Army’s wearable battery needs.
Earlier this month, Enovix announced that it had completed the equipment installation in its first US factory, in Fremont, California, and at the same time announced that it had contracted with a California-based tech company to provide batteries in the wearable device space. The contract includes a manufacturing reservation and pre-payment fees totaling $3.5 million for the coming year. The contract is valued at $20 million, and commercialization activities are targeted to begin in 2025.
Enovix has not yet begun mass production of its batteries, and it’s new to the public markets – it’s a classic speculative play, with key point being based around potential. It’s here that Oppenheimer’s 5-star analyst Colin Rusch sees a reason to invest. He rates the stock an Outperform (i.e. Buy) along with a $32 price target. Shares could add ~116% of muscle should the forecast pan out as planned over the next 12 months. (To watch Rusch’s track record, click here)
Backing his stance, Rusch writes: “We estimate the battery content in wearables, communications devices, computing, and virtual reality will reach ~$13B+ by 2025 and see Enovix’s offering as enabling product features for its customer that would otherwise not be possible. We believe this dynamic will support premium pricing and customer continuity as the company scales manufacturing. We are already seeing evidence of customer engagement with a wearables company making a deposit to reserve capacity in Fab 1. We believe ENVX’s enhanced balance sheet is giving potential customers more comfort on ENVX’s ramp and ability to be a reliable partner.”
Are other analysts in agreement? They are. Only Buy ratings, 3 to be exact, have been issued in the last three months. Therefore, the message is clear: ENVX is a Strong Buy. Given the $29.67 average price target, shares could soar ~99% in the next year. (See ENVX stock analysis on TipRanks)
MarketWise (MKTW)
The next Oppenheimer pick we’re looking at is MarketWise, an information platform for ‘self-directed investors.’ The company provides a multi-brand subscription service offering high-level, premium financial research, software, education, and digital tools for investors. MarketWise is committed to the financial literacy and individual success of its clients.
Like Enovix, this is another company that went public last month through a SPAC merger. MarketWise’s transaction, with Ascendent Digital Acquisition Corporation, saw the MKTW ticker start trading on the NASDAQ on July 22.
Earlier this month, MarketWise released its first quarterly earnings report as a public entity, for 2Q21, and the results show a company that appears primed for growth. The first point was the 45.5% year-over-year growth in paid subscribers, to 1 million. The company also saw total billings increase to $185.1 million, a gain of 50.4%, and cash flow from operations grow by 86% to $58.9 million. At the top line, total revenues increased 71.7% year-over-year, to $142.1 million.
In an interesting point, and one that likely bodes well for future growth, the company reported that free subscribers increased to 12 million during Q2, a gain of 75.6%. This is the pool from which likely new paying customers will be targeted.
Jason Helfstein, another of Oppenheimer’s 5-star analysts, sets forth a highly bullish case for MKTW stock.
“We believe MarketWise is well positioned in the financial education market for self-directed investors, which we believe is as large as ~36M investors. The company has an opportunity to monetize a highly engaged user base of 13M self-directed investors using the platform (~1.0M paid users)…. With an attractive financial profile of +85% gross margins, we believe MarketWise presents a compelling investment opportunity,” Helfstein opined.
These comments support Helfstein’s Outperform (i.e. Buy) rating, and his $19 price target indicates room for ~179% growth over the year ahead. (To watch Helfstein’s track record, click here)
Overall, this is a stock with a Strong Buy consensus rating. MarketWise’s rating is based on 5 recent reviews, that have a 4 to 1 breakdown in favor of Buys over Hold. The shares are trading for $6.81, and their $15.60 average price target suggests ~130% one-year upside. (See MKTW stock analysis on TipRanks)
Veru (VERU)
We’ll wrap up with a biopharmaceutical company, Veru. Veru is focused on oncology, and is working on new medications for the treatment of two high-profile cancers, breast cancer and prostate cancer. The company also has the FC2 product on the market, an internal female condom – and the only one of its type approved by the FDA and cleared by the World Health Organization.
FC2 provides a steady revenue stream for Veru, and that stream is gaining strength. In the company’s fiscal third quarter of 2021, which ended June 30, revenues from FC2 increased by 150% to $13.5 million. This makes up the lion’s share of the company’s total net revenues of $17.7. million.
The key point for Veru is its oncology biopharma research program. The company has several drug candidates in the pipeline, and as many as 7 clinical trials ongoing. The trials range from Phase 2 to Phase 3, and involve considerable overlap – both Veru-111 and Veru-100 are on the prostate cancer track, and Veru-111 and Enobosarm are both on the breast cancer track. In addition, Veru-111 is undergoing a Phase 3 study with COVID-19 patients hospitalized for high-risk of Acute Respiratory Distress Syndrome (ARDS).
On the prostate cancer track, the Phase 3 VERACITY trial is currently enrolling patients. This study will look at VERU-111 at 32mg in men with metastatic castration resistant prostate cancer. The company plans to enroll 245 patients in the study. On the COVID track, Veru-111 is again under investigation, in a Phase 3 study which was initiated in May. The trial is being conducted in the US, Argentina, Brazil, Colombia, and Mexico. Enobosarm is the subject of the ARTEST Phase 3 clinical study, testing the drug against various forms of breast cancer. The study is planned to begin in the second half of this year, with up to 210 patients.
The proliferation of clinical trials here is the key point for Oppenheimer’s Leland Gershell, who writes: “We have broad enthusiasm for VERU’s oncology pipeline/programs and their respective commercial opportunities, for which success in any one would support a significantly higher valuation than currently reflected by the market… We believe shares have significant upside as enobosarm and sabizabulin advance in their respective development programs.”
To this end, Gershell rates VERU an Outperform (i.e. Buy), and his $26 price target implies ~225% upside for the next 12 months. (To watch Gershell’s track record, click here)
All in all, other analysts echo Gershell’s sentiment. 3 Buys and no Holds or Sells add up to a Strong Buy consensus rating. With an average price target of $22.50, the upside potential comes in at ~183%. (See VERU stock analysis 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.
