Almost two months into 2021, the market appears undecided about where it is heading next. In fact, many investors fear the market is due for a serious correction, especially for the wide selection of richly valued stocks. It is an environment that requires fussier stock picking. Or maybe it’s prudent to turn in such times to the best at spotting where the next opportunity lies. And for best, we mean the cream of the crop – the finest analysts on Wall Street. We’ve pulled up the details on 3 stocks that the Street’s top 3 analysts, according to the TipRanks database, have recently earmarked as ones to look out for over the next 12 months. All three are from different sectors but have one characteristic in common; they are rated Strong Buys by the analyst consensus. Avalara, Inc. (AVLR) We’ll start with Avalara, a software company that develops cloud-based systems for international tax preparers, making it a much-needed product for any business with international clients. Avalara’s products automate business tax compliance, and integrate apps for business, tax, and accounting records – all services that are necessary for keeping small- and mid-sized customer companies in line with local and international tax regulations. The COVID pandemic – and the social lockdowns and travel restrictions put in place to combat it – have made it difficult for small businesses to reach out to their tax professionals – and made Avalara’s products in tax automation suddenly more valuable. The company’s stock has soared since the market downturn last winter, gaining 205% since its lowest point, hit last March. These share gains have come alongside steady revenue growth. The last quarter reported, 4Q20, showed $144.76 million at the top line, up 13% sequentially and 34.5% year-over-year. Even better, for investors seeking strength, Avalara announced in December that it will be acquiring the German tax software firm INPOSIA. The financial terms of the agreement were not disclosed, but INPOSIA brings additional international tax know-how, access to Europe’s largest economy, and workforce of 50 people – which are all now assets for Avalara. Piper Sandler analyst Brent Bracelin is ranked #1 out of more than 7,200 analysts, and he sees the INPOSIA acquisition as a strong move for Avalara in adjusting to the European compliance scene. “New e-invoicing laws could emerge as a regulatory catalyst. Several European countries have plans to modernize the 20+ year old VAT system with intent to move to digital invoicing and real-time reporting,” the 5-star analyst said. “INPOSIA acquisition serves as a key digital bridge into tax authorities. The acquisition of a German software firm that is expected to close during the 1H of 2021 has the potential to emerge as a new vehicle for Avalara to capitalize on all these new e-invoicing laws…” Bracelin believes that international sales are Avalara’s next leap for incremental growth. In line with this outlook, the analyst rates the stock an Overweight (i.e. Buy) and his $210 price target implies 26% upside for the coming year. (To watch Bracelin’s track record, click here) Of the 11 analysts who have reviewed Avalara in recent weeks, 10 agree with Bracelin that this is a stock to buy, and this breakdown of 10 Buys to 1 Hold gives the company a Strong Buy analyst consensus rating. Shares in Avalara are priced at $166.60, and the $209.45 average price target suggests its has ~26% growth potential from that level. (See AVLR stock analysis on TipRanks) Axcelis Technologies (ACLS) Next up, Axcelis, is a small-cap company in the support sector of the semiconductor industry. Axcelis produces manufacturing equipment essential in semiconductor chip fabrication; specifically, Axcelis is a specialist in ion implantation technology essential to the chip fab process. Turning to the revenues, Axcelis reported $122.2 million in 4Q20, a 13.5% year-over-year gain and beating the estimates by $3.8 million. EPS in Q4 jumped from 0.29 cents one year ago to 43 cents, also beating the Street’s call by 13 cents. The beat was the latest in a long series of bottom-line outperformance; Axcelis has beaten the forecasts in each of the last 9 quarters. In his review of Axcelis, Needham’s Quinn Bolton, rated the #2 analyst on Wall Street by TipRanks, believes the company’s product line and sales prospects back up management’s optimism. “[We] are more confident about the strength and visibility of WFE (wafer fab equipment) in 2021, and now expect the company to reach $500MM revenue for the full year. We also raise our 2022 estimates and now believe ACLS will reach its $550MM revenue target in 2022, driven by two consecutive years of DRAM WFE growth, continued strength of mature nodes, and share gains,” Bolton opined. These comments support Bolton’s Buy rating, and his $44 price target implies an upside of ~13% for the next 12 months. (To watch Bolton’s track record, click here) Bolton’s colleagues on Wall Street are in broad agreement with his stance on ACLS – as shown by the stock’s Strong Buy consensus rating with a unanimous 5 reviews. The average price target, $46.80, is a bit more bullish than Bolton’s, and suggests ~20% upside from the current share price of $39.02. (See ACLS stock analysis on TipRanks) TFF Pharmaceuticals (TFFP) From the semiconductor industry, we move over to the biotech sector, to TFF Pharmaceuticals. The TFF stands for Thin Film Freezing, the biopharma’s patented tech platform on which it is basing the development of its innovative drug products. The platform makes it possible to create dry powder-based formulations of agents that are presently given orally, turning them into inhalable therapies. Amongst a selection of next-generation versions of available drugs, the two most advanced candidates are poised to enter mid-stage trials over the medium-term. H.C. Wainwright analyst Ram Selvaraju is ranked 3rd amongst Wall Street analysts and believes these can act as major catalysts for the stock. One candidate is TFF VORI, an inhaled dry powder version of Voriconazole and earmarked for the treatment of Invasive Pulmonary Aspergillosis (IPA), a dangerous fungal pulmonary disease that in some patient populations can have a 90% mortality rate. Selvaraju expects TFF to kick off Phase 2 development of TFF Vori in 1H21, and anticipates top-line data in mid- to late 2022. This could lead into a Phase 3 study also next year or an NDA filing “if the pivotal program is determined not to be required by the FDA.” The second candidate making progress is TFF Tac-Lac, an inhaled dry powder take on Tacrolimus, and designed to prevent the rejection of an organ transplant. A Phase 2 program could begin sometime this year with the possibility for a data readout in 2022. If the Phase 2 data is “sufficiently impactful,” says Selvaraju, a Phase 3 program might not to be required. Selvaraju thinks the company could launch both TFF Vori and TFF TacLac in 2024 and “achieve profitability in that year.” Summing up his bullish thesis, the 5-star analyst said, “We are convinced that there is still substantial upside potential with respect to its most advanced clinical-stage candidates and that the company’s early-stage pipeline and plat
form applicability remain underrated.” Accordingly, Selvaraju rates TFFP shares a Buy along with a $31 price target. Investors stand to pocket a 95% gain should the analyst’s thesis play out. (To watch Selvaraju’s track record, click here) TFF has few analysts tracking its progress right now, but all are backing its success. Based on 3 Buys, the stock has a Strong Buy consensus rating. The average price target stands at $28.33 and suggests gains of ~78% in the year ahead. (See TFFP stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. 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.