The US government shut down today. We could go on a rant, but let's keep calm and invest on instead.
US government employees stayed home today – in the first government shut down in 17 years – but the markets didn't seem to notice. European and US stocks climbed this morning, rising above the endless bickering coming out of Washington.
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But the media remains transfixed on what they consider the central question – who is to blame? Several newspapers made their feelings clear this morning (and we particularly agree with The Washington Post Style section).
Much attention has focused on Republican lawmakers. They have made one futile attempt after another to stop the Affordable Care Act (also known as Obamacare) ever since it was passed, including during this week's government spending debates. But now the jokes on them, in a way. Funding for the healthcare law was already put in place, and will not be impacted by the shutdown.
Also not affected by this pause in governing – Congressional payroll. Meanwhile national parks, museums and NASA are definitely closed, and programs like the Veterans Administration disability claims as well as the IRS will likely shut their doors.
But the markets, and analysts, don't seem to mind. So does that mean investors should operate as normal? Not necessarily. The debt ceiling debate coming up later this month could have a far greater impact on the markets.
We decided to turn to one of our favorite screens – finding stocks trading below even the lowest target price set by analysts. And since the Affordable Care Act is rolling out despite conservative opposition, we focused on the healthcare industry.
First we searched for healthcare stocks that are trading at significant discounts to their fair value based on analyst target price, with the assumption that they will move up to their fair value in the near future.
We only included stocks with five or more analyst ratings. And because analyst prices are notoriously inflated, we compared current price to the lowest target.
Besides screening for seemingly rock bottom prices, we also wanted to find signs of growth going forward, so we narrowed our results based on 5-year projected earnings per share (EPS) growth, a signal that investors see strong long-term growth potential.
Limiting our list to those healthcare stocks with projected EPS growth above 15%, four stocks remained.
Click on the interactive chart to see data over time.
Do you see investment opportunities despite the actions of our lawmakers? Use the list below as a starting point for your own analysis.
1. Keryx Biopharmaceuticals Inc. (KERX, Earnings, Analysts, Financials): Focuses on the acquisition, development, and commercialization of pharmaceutical products for the treatment of life-threatening diseases, including cancer and renal disease. Market cap at $825.57M, most recent closing price at $10.10.
Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $12. This implies a potential upside of 18.81% from current levels around $10.1.
EPS growth next 5 years: 30.00%
2. Solta Medical, Inc. (SLTM, Earnings, Analysts, Financials): Designs, develops, manufactures, and markets energy-based medical device systems for aesthetic applications. Market cap at $168.6M, most recent closing price at $2.12.
Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $2.5. This implies a potential upside of 17.92% from current levels around $2.12.
EPS growth next 5 years: 25.00%
3. Cardiovascular Systems Inc. (CSII, Earnings, Analysts, Financials): Focuses on developing and commercializing interventional treatment systems for vascular disease. Market cap at $485.13M, most recent closing price at $20.07.
Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $24. This implies a potential upside of 19.58% from current levels around $20.07.
EPS growth next 5 years: 20.00%
4. Ariad Pharmaceuticals Inc. (ARIA, Earnings, Analysts, Financials): Focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. Market cap at $3.45B, most recent closing price at $18.69.
Of the 21 analysts that have set a target price on the stock, the lowest price target stands at $22. This implies a potential upside of 17.71% from current levels around $18.69.
EPS growth next 5 years: 19.60%
(List compiled by Emily Smykal. Target price data sourced from Yahoo! Finance. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.)
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Keryx Biopharmaceuticals Inc. (KERX, Chart, Download SEC Filings)
- Solta Medical, Inc. (SLTM, Chart, Download SEC Filings)
- Cardiovascular Systems Inc. (CSII, Chart, Download SEC Filings)
- Ariad Pharmaceuticals Inc. (ARIA, Chart, Download SEC Filings)
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