Just three trading weeks into the new year, a half dozen U.S. mid- or large-cap stocks are already up 20% or more.
Picking up where it left off last year, artificial intelligence (AI) data center leader NVIDIA Corporation (NASDAQ: NVDA) is one. Courtesy of a buyout from Hewlett Packard Enterprise Company (NYSE: HPE), Juniper Networks Inc. (NYSE: JNPR) is another. Then there's Super Micro Computer Inc. (NASDAQ: SMCI), which blasted 36% higher on Friday after raising guidance. Like NVIDIA, demand for AI technology was the catalyst.
The other three stocks are U.S. mid-caps, an asset class that has recently lagged its larger cousin due to strong mega-cap tech returns. Drug maker Alvotech (NYSE: ALVO), real estate services company Tricon Residential Inc. (NYSE: TCN) and Uranium Energy Corporation (NYSEAMERICAN: UEC) are early winners.
With the market setting the odds of a March 2024 Federal Reserve interest rate cut slightly above 50%, investors appear to be comfortably in 'risk-on' mode. This bodes well for an extended bull rally in U.S. stocks, notably higher risk small and mid-cap names.
If mid-caps finally find their footing this year, some of the biggest percentage gains could come from lower-priced stocks. The good news for investors is that there are plenty of choices. Approximately one out of every five U.S.-listed mid-caps are currently priced below $20.00 per share. But since this widdles the field down to about 200 stocks, where should you go from there?
Using MarketBeat's robust Stock Screener tool, we searched for companies with overwhelmingly bullish Wall Street sentiment. These are among the most interesting.
What is a good mid-cap energy stock?
Crescent Point Energy Corp. (NYSE: CPG) is a $3.4 billion Canadian oil producer with four main assets across Alberta and Saskatchewan. The company is projecting $750 million to $950 million of excess free cash flow this year, the majority of which is pegged to go to shareholders. This includes a base dividend, which is expected to be $0.115 per share in the first quarter of 2024, a special dividend and stock buybacks. With a current share price of $6.44, the base dividend alone equates to an annualized yield of 7.1%.
Crescent's shareholder-friendly nature and potential to benefit from an oil price rebound have Wall Street unanimously bullish. All nine firms that cover the stock have buy ratings, and their $10.00 average price target implies more than 50% upside. Last month, Crescent unveiled a five-year growth plan that includes ramping production by 29% by 2028.
What mid-cap biotech stock does Wall Street like?
Ardelyx, Inc. (NASDAQ: ARDX) is certainly one of them. The $2 billion biopharmaceutical company has a pair of commercialized products in the U.S. — IBSRELA and XPHOZAH, which are medicines for irritable bowel syndrome (IBS) and chronic kidney disease (CKD), respectively. Both are patent protected for another 10 years. It also has several early-stage candidates.
In the fourth quarter of 2023, IBSRELA sales increased 26% sequentially to $28.1 million. For all of this year, management is anticipating that its key asset will generate $140 million to $150 million in revenue en route to possibly becoming a $1 billion drug by the time the patent expiration rolls around.
The long growth runway and low share price have analysts taking a bullish stance on Ardelyx. All seven analysts that actively follow the company have a buy rating, and the $12.25 consensus target points to about 50% upside over the next 12 months.
Are analysts bullish on VinFast Auto?
On the cusp of being a large cap, VinFast Auto Ltd. (NASDAQ: VFS) is an electric vehicle (EV) manufacturer based in Vietnam. Last week, the company announced that fourth quarter 2023 vehicle deliveries increased 35% quarter-over-quarter to 13,513. While slower EV adoption in certain markets has caused growth to fall short of management's lofty projections, the figure marked an acceleration from previous quarters.
In response to the news, the stock rallied from $5.50 to $6.00 to close out the week. The former IPO high-flier has gone nowhere fast since soaring above $90.00 in August 2023, but the few U.S. research firms that cover the stock think the selloff is overdone. All three have buy ratings with price targets ranging from $7.00 to $12.00. Aside from the low share price, analysts have expressed bullish sentiment about VinFast's supply chain and strong research and development (R&D) capabilities.
This past summer, VinFast broke ground at its North Carolina manufacturing plant, where it plans to ramp up production of its seven EV models. The company faces an uphill battle against Tesla, GM and Ford, but its positioning in every SUV segment could make it a viable option for consumers — and a comeback stock worth watching.
