For more than a year, investors have been spoiled by an epic rally on Wall Street. After losing 34% of its value in a span of just 33 calendar days in the first quarter of 2020, the benchmark S&P 500 has roared back to gain 87% since hitting its bear-market bottom on March 23, 2020, through this past weekend…
Though large-cap stocks (companies with market caps of at least $10 billion) have been the stars of this rally, it’s small-cap stocks ($300 million to $2 billion market cap) that Wall Street believes are ready to shine. Small-caps are typically riskier in that their operating models aren’t time-tested or proven. But they can usually deliver superior growth prospects compared to more mature companies.
Based on the consensus one-year price targets of Wall Street analysts, the following five small-cap stocks all offer upside ranging from 60% to as much as 140%.
Vaxart: Implied upside of 140%
There are close to 2,000 small-cap stocks and securities for investors to choose from. However, Wall Street professionals believe you’ll have a hard time topping the potential 140% return over the next year from clinical-stage biotech stock Vaxart (NASDAQ:VXRT).
The Vaxart rags-to-riches story will come down to how well the company’s coronavirus disease 2019 (COVID-19) treatment option, VXA-CoV2-1, fares in clinical studies. What makes this treatment so unique is that it’s a tablet, rather than a shot, which could play a key role in overcoming vaccine resistance and administration. After all, you don’t need trained medical personnel to administer to a tablet.
At the beginning of February, Vaxart announced a positive first step for VXA-CoV2-1 in a phase 1 trial. Preliminary data showed it had reached all of its primary and secondary safety and immunogenicity endpoints. Plus, there were early signs it could be effective against the original and variant strains of COVID-19.
It’s far too early to tell if Vaxart’s oral COVID-19 treatment will be a success in mid-or-late-stage trials, but it certainly offers game-changing potential if it is effective.
Harvest Health & Recreation: Implied upside of 90%
With cannabis expected to be a major growth trend this decade, perhaps it’s no surprise to find a lofty 12-month price target assigned to U.S. multistate operator (MSO) Harvest Health & Recreation (OTC:HRVSF). If Wall Street’s price target is accurate, Harvest Health could gain 90% over the next year.
Unlike most U.S. MSOs, Harvest Health was a bit too wide-eyed in 2019 and overextended itself. After terminating a handful of deals and raising capital, the company is now on track to potentially eke out a profit in 2021 on an estimated $380 million in full-year sales. For context, this represents implied sales growth of 64%.
Currently, the company has 37 operational retail locations in five states, with a core focus on four markets: Arizona, Florida, Maryland, and Pennsylvania. Florida is raking in big bucks despite only being legal for medical marijuana, while Pennsylvania is a limited license state, which should provide some degree of competitive protection for the company as it aims to gobble up share. But with 15 stores open its home state of Arizona, the Grand Canyon State represents Harvest Health’s greatest opportunity.
Though it’ll have to prove to investors that it’s overcome its early operating missteps, Harvest Health looks to be on its way to “going green” in 2021.
EverQuote: Implied upside of 83%
Another small-cap stock with serious upside potential is online insurance marketplace provider EverQuote (NASDAQ:EVER). Based on a consensus price target of $61.58, EverQuote could gain up to 83% over the next year, if analysts are accurate.
Talking about anything having to do with insurance is usually enough to put people to sleep. EverQuote aims to change that with its online marketplace where consumers can quickly and easily get price policies from leading insurance providers. According to the company, 1 in 5 consumers ends up purchasing a policy on its platform, which demonstrates that its shoppers tend to be motivated. In other words, insurers are getting more bang for their advertising buck by entrusting EverQuote’s marketplace.
According to the company, digital insurance ad spending is expected to grow by 16% annually over the next four years. By comparison, total ad and distribution spending for the insurance industry, including digital spending, is only forecast to grow by…
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