Category Archives: Biotech Stocks

Top 10 Tech Stocks To Invest In Right Now

For better or worse, growth stocks are notoriously volatile. But for astute investors who can manage to recognize timely buying opportunities, they can be a fantastic way to generate outsized gains over the long term.

So we asked three top Motley Fool investors to each discuss a growth stock that they think investors should consider buying now. Read on to learn why they like following stocks.

 

Top 10 Tech Stocks To Invest In Right Now: Twitter, Inc.(TWTR)

Twitter (NYSE:TWTR) added to its 47% spike in 2017 to gain over 80% so far this year. The micro-blogging platform isn’t logging anything near the user growth or the profit boosts that peer Facebook has managed. However, Twitter did post a 21% sales improvement in the most recent quarter as growth accelerated sharply from the prior quarter’s 2% uptick. Looking ahead, shareholders are hoping that CEO Jack Dorsey and his team can significantly boost the user base from its current level of 336 million. As its content trends toward high-margin video, meanwhile, advertising income should help Twitter log another year of earnings improvements as it works toward achieving annual profitability.

Top 10 Tech Stocks To Invest In Right Now: Hess Corporation(HES)

While red-hot oil prices helped fuel Hess’ gains this year, it was far from the only catalyst. Hess and its partner ExxonMobil announced three more offshore discoveries near Guyana, bringing the total to eight. The partners now plan to develop three phases of that field, which could produce more than 500,000 barrels of oil per day by late 2023. In addition to that, Hess continued cleaning up its portfolio and balance sheet by selling its joint venture in the Utica Shale and paying off more debt. Meanwhile, the company has used the excess cash generated by higher oil prices to buy back stock, authorizing a $1.5 billion repurchase program, enough to retire nearly 10% of its outstanding shares. The company could expand that program even further later this year given the uptick in crude prices.  

Top 10 Tech Stocks To Invest In Right Now: Red Hat, Inc.(RHT)

This is a rare opportunity to pick up shares in a red-hot growth stock at a serious discount.

The Linux and open-source software veteran had seen its share prices double in 52 weeks, heading into June’s first-quarter report. In that report, Red Hat exceeded its own guidance targets across the board and also stomped Wall Street’s expectations. Yet, the stock took a 12% nosedive the next day and has stayed down ever since. Today, Red Hat shares are trading 23% below those pre-earnings highs.

Analysts took one look at Red Hat’s modest second-quarter guidance, ignoring optimistic full-year targets, and punished the stock with a slew of downgrades and target-price cuts.

It’s true that Red Hat shares were trading a little high before this correction, as the market cap amounted to 112 times trailing earnings and 36 times free cash flows. But Red Hat has earned its druthers by posting a long string of fantastic high-growth results. In the first quarter, earnings rose 24% year over year on 20% higher sales.

The growth story hasn’t changed — analysts simply overreacted to a strong seasonal swing. Right now, Red Hat’s stock trades at 27 times free cash flows — quite comparable to larger and slower-growing enterprise software rivals SAP (NYSE: SAP) at 33 times FCF and Microsoft’s (NASDAQ: MSFT) price-to-FCF ratio of 23.

This sale won’t last. Grab Red Hat’s stock while the discount is hot.

Top 10 Tech Stocks To Invest In Right Now: Apple Inc.(AAPL)

Successful investors know the value of a company that generates cash and has a durable competitive advantage over the competition. If you combine those with growth you get a stock with home run potential. That’s why after all these years of the stock going up, Apple is still a great buy today. 

The chart below shows that Apple is still a growth company, increasing revenue by 45% over the last five years and generated over $53 billion of net income in the past year. 

AAPL Revenue (TTM) Chart

AAPL REVENUE (TTM) DATA BY YCHARTS.

What Apple has going for it is an engrained ecosystem in smartphones that will be nearly impossible for competitors to penetrate. The iPhone may only have 15.6% of the global smartphone market, according to IDC, but it’s the premium portion of the market and generates far more value than competitors. iPhone is also the center of the ecosystem, which expands to Macs, Apple TVs, AirPods, and other products that work seamlessly with Apples apps and services. 

For investors, the earnings you see above are returned in the form of a dividend, currently yielding 1.6%, and share buybacks using the $145.4 billion of net cash on the balance sheet. With a new plan to be "cash neutral," that could mean hundreds of billions in share buybacks over the next decade, $100 billion of which is already authorized by the board of directors. Whether you’re looking at earnings, cash on the balance sheet, or a company with a wide competitive moat, Apple fits the bill. 

Top Dividend Stocks To Buy Right Now

Those who have considered investing the oil industry lately will likely find a fascinating story. Many companies are still trading at valuations we saw a couple years ago when oil prices were below $50 a barrel, but the looming threat of alternative energy has some people wondering how much longer oil’s investment window will last. 

Fortunately for those looking at these attractive valuations, oil’s end-of-days scenario is likely a ways down the road. So we asked three Fool.com contributors to highlight a stock they see in the oil industry right now that looks attractive. Here’s why they picked these stocks.

Top Dividend Stocks To Buy Right Now: iAnthus Capital Holdings, Inc. (ITHUF)

iAnthus Capital Holdings owns and operates eight cannabis cultivation facilities and 46 dispensaries in four U.S. states: Florida, New York, Massachusetts, and Vermont. The company also strategic partnerships with cannabis businesses operating in Colorado and New Mexico.  

Shares of iAnthus have jumped more than 150% so far this year. The stock surged in mid-January following the company’s acquisition of the medical marijuana business owned by GrowHealthy Holdings. This deal allowed iAnthus to expand in a significant way into the Florida market. Over the next couple of months, though, the stock gave up most of those gains. However, iAnthus has been on a roll since early April, helped in part by the close of its full acquisition of Massachusetts-based Pilgrim Rock and a $50 million investment by Gotham Green Partners.

Like MariMed, iAnthus stands to benefit from growth in the cannabis market in Massachusetts. But Florida and New York could be even more important to the company’s future. iAnthus currently claims one of only 13 cannabis licenses in Florida and one of 10 licenses in New York.

Hot Safest Stocks To Watch Right Now

Gold prices have been all over the place in the past one year, but some gold stocks have moved in only one direction: south. As of this writing, Canada-based gold miner Eldorado Gold (NYSE:EGO) is down a whopping 66% in one year. South African miner Sibanye-Stillwater (NYSE:SBGL) is swiftly closing in, having shed as much as half its value with the bulk of the decline coming in just the past couple of months. Among the larger gold miners, Kinross Gold (NYSE:KGC) is down about 11% in one year, or 15% year to date.

Are any of these gold stocks worth buying now? A case-by-case analysis should help you decide.

Hot Safest Stocks To Watch Right Now: Brookfield Renewable Powerr Fund(BEP)

Personally, I think dividend investors will get the best bang for their buck from a dividend stock with companies that can offer a rather generous yield an maintain a reasonable growth rate. For a company to be able to achieve these two things over the long haul, it needs to have a business model that has quite a bit of clarity several years out, and a management team with a proven track record of capital allocation. Brookfield Renewable Partners checks every one of these boxes.

Brookfield Renewable owns and operates about $25 billion in power-generating assets globally, most of which are hydropower stations. The assets it owns have contracts in place that give an immense amount of revenue clarity for several years into the future. Being able to project revenue with such certainty allows Brookfield to distribute such a large portion of its cash to shareholders in the form of a dividend currently yielding 6.6%. 

Having assets that throw off a lot of cash isn’t that uncommon, though. What’s rare is a management team like Brookfield’s that can effectively manage the growth of the business when so much cash is dedicated to investors. One thing that Brookfield’s management has proven to be quite adept at is sniffing out undervalued investments and buying them at discounted or distressed rates. Examples were when it bought hydropower stations in Colombia at an auction where it was the only participant as well as the acquisition of TerraForm Global when its former parent, SunEdison, was in bankruptcy proceedings. Buying assets when they are out of favor has led to higher rates of return.

This formula, coupled with prudent management of the balance sheet, has worked exceptionally well for the company as it has outpaced the S&P 500 on a total return basis by a wide margin. As long as Brookfield sticks to this strategy, its stock should continue to reward investors for a long time. 

Hot Safest Stocks To Watch Right Now: Enterprise Products Partners L.P.(EPD)

Enterprise Products Partners came public nearly 20 years ago to little fanfare. The master limited partnership (MLP) raised a little under $250 million at the time to fund development projects and acquisitions. That seed money jump-started the company’s growth journey, which has seen it become an energy infrastructure powerhouse over the years. As a result, initial investors have done quite well. Overall, Enterprise has generated a total return of more than 1,730%, which would have turned a $5,000 investment at its IPO into more than $86,500. For comparison’s sake, the S&P 500’s total return over that time frame is 268%, which would have turned $5,000 into just $13,400.
A main driver of that return has been Enterprise’s spectacular ability to increase its distribution to investors. Since its IPO, the MLP has increased its payout 64 times, including in each of the last 55 consecutive quarters. That growing income stream has generated the lion’s share of the company’s total return.
While Enterprise Products Partners might not repeat that performance over the next 20 years, it still has plenty left in the tank. The company recently put the finishing touches on $5.3 billion of growth projects and has another $4.9 billion under construction. Those expansions should fuel continued distribution increases so that it can create more value for investors in the coming years.

Hot Safest Stocks To Watch Right Now: Exxon Mobil Corporation(XOM)

ExxonMobil is one of the world’s largest integrated energy giants. It produces oil and natural gas on the upstream side of its business and chemicals and refined products on the downstream side. This helps to even out its performance when energy prices are volatile — a fairly common condition. This balanced model also speaks to the highly conservative culture of the energy giant, which is further highlighted by its impressive 36-year streak of annual dividend increases and its low debt level. (Long-term debt is just 10% of the capital structure.) 

That conservatism, however, can leave it flat-footed when markets are moving quickly. That’s exactly what’s happening right now. ExxonMobil started pulling back on capital spending during the deep oil downturn that started in mid-2014, and has been late to hit the accelerator now that crude prices have recovered. For example, first-quarter earnings were up roughly 15% year over year, but many of its integrated peers have been doing better. For example, Royal Dutch Shell, which made a huge acquisition during the downturn, saw Q1 earnings advance nearly 63%.    

Another key problem is that ExxonMobil’s production has been weak: It fell slightly in each of the last two years, and did so again, year over year, in Q1. Recently, the Motley Fool’s Tyler Crowe described Exxon as "testing" its investors — and that situation isn’t likely to end for a couple of years, as the company’s large growth projects aren’t expected to add materially to its revenues or profits until 2020. In the meantime, investors get to watch capital spending rise with little return on that investment.

XOM Price to Tangible Book Value Chart

XOM PRICE TO TANGIBLE BOOK VALUE DATA BY YCHARTS

It’s no wonder, then, that ExxonMobil’s dividend yield is on the high side of its historical range at around 4%. And the company’s tangible book value is lower than it has been since the late 1980s. Don’t expect a quick turnaround, either, as large projects in Guyana, Brazil, and Mozambique, among other locations, will take time to develop. But once they are up and running — they’ll account for roughly half of the energy giant’s upstream earnings by 2025 — investors will likely reward ExxonMobil stock with a higher valuation. It is also working on large new downstream projects that will help to boost results, but they too are a few years from completion.   

While these long-term plans play out, however, patient investors can collect large yields backed by a growing dividend at a conservative energy company. That’s a worthwhile trade-off in my opinion.

Hot Safest Stocks To Watch Right Now: Buckeye Partners L.P.(BPL)

Buckeye Partners is a relatively small midstream energy limited partnership, and a more aggressive play for investors. The partnership’s core assets are pipelines and storage. It differentiates itself from many of its peers because it has a truly international presence, with storage assets located in the Caribbean, Europe, Asia, and the Middle East. The problem is that Buckeye’s distribution coverage ratio has been notably weak, falling to just 1 in 2017. Investors are worried that the partnership’s current round of capital spending will compel it to cut the distribution.   

That’s not an unreasonable expectation. However, management has steadfastly continued to assert that it will support the dividend. As recently as June 5, they stated: "Given our current outlook, we have no intentions of cutting Buckeye’s distribution." And a cut would likely be a last-resort move, given that the partnership has increased its distribution annually for 22 consecutive years. Moreover, management has taken the long view before, letting the coverage ratio fall below 1 in 2013 and 2014 while it waited for investments to bear fruit.   

BPL Financial Debt to EBITDA (TTM) Chart

BPL FINANCIAL DEBT TO EBITDA (TTM) DATA BY YCHARTS

The partnership is also fairly conservative financially, with a debt-to-EBITDA ratio of around 4.9, which isn’t particularly out of line with its midstream peers or its own history. However, the fear of a distribution cut is a big headwind in an asset class that’s specifically designed to push income through to unit holders, which is why Buckeye’s distribution yield is a massive 14% today.

The partnership doesn’t expect to issue any new units through the end of 2019, which would make it even harder to cover distributions. Although the recent use of hybrid debt and issuance of a new class of units that have a payment in kind distribution (which temporarily allows the partnership to avoid cash distributions on the units) suggests Buckeye is getting aggressive in order to raise non-dilutive cash, management believes that it still has plenty of financing options available should it need additional funds. Buckeye is openly calling 2018 a transition year, with major projects, like expansions in Texas, Chicago, and Michigan/Ohio, not expected to add materially to the top or bottom lines until 2019 or 2020.     

If you can take the long view along with management, Buckeye’s huge yield is worth the risk for investors who can handle a little uncertainty. When coverage picks back up, the market is likely to push the unit price higher.

Best Undervalued Stocks To Watch For 2019

Biotech stocks can sometimes soar on news that you’d expect would cause them to fall. Most of the time, though, they jump due to catalysts that are perfectly logical.

Both scenarios happened this week for three soaring biotech stocks. Here’s what lit a fire beneath these stocks — and whether they’re smart picks for investors now.

Best Undervalued Stocks To Watch For 2019: Eldorado Gold Corporation(EGO)

First thing first, let’s see how Eldorado Gold fared operationally in the past year or so.

Metric Fiscal 2017 Fiscal 2016 Q1 2018 Q1 2017
Gold production (in ounces) 292,971  312,299  89,374 $75,172 ounces
Revenue $391.4 million $432.7 million $131.9 million $111.9 million
Net profit/loss ($9.9 million) ($344.2 million) $8.7 million $6.8 million
AISC (per ounce) $922  $900  $878 $791

DATA SOURCE: ELDORADO GOLD FINANCIALS.

Eldorado Gold’s net loss may have shrunk last year, but its loss from continuing operations (the miner sold off Chinese assets in 2016) were still higher. The miner clearly has a problem at hand: rising AISC. 

The market blew up and sent Eldorado shares tumbling 40.9% in October last year after the miner downgraded its fiscal 2017 production estimates for its flagship Kisladag mine at Turkey for the second time. Investors were already worried about a more serious concern: The Greek government’s initiation of arbitration proceedings against Eldorado to settle disputes over its key developing projects, including Skouries and Olympias mines. 

The recent positive news from Greece and good Q1 numbers haven’t helped as investors are clearly running out of patience, more so as there’s been no update ever since the Greek government announced intentions to "reach an agreement in the coming weeks" more than a month ago. Meanwhile, Eldorado shares have already broken the crucial $1 mark at the time of this writing. If sustained, the company could be forced to go for a reverse stock split to stay listed on the New York Stock Exchange. That’s not a great sign, and until there’s substantive progress in Greece or some encouraging news coming out of Eldorado’s second-quarter report due in a month’s time, the stock remains a risky bet.

Best Undervalued Stocks To Watch For 2019: Harley-Davidson, Inc.(HOG)

While Harley-Davidson isn’t doing nearly as well as Disney, it’s still a stock that investors should consider. The motorcycle king retains a lot of potential despite going through a particularly rough patch nowadays.

The motorcycle market is shrinking, and Harley’s core middle-aged male buyers aren’t showing up at dealerships in nearly the numbers they used to. Buyers today are younger and more urban, more of them are female — and they are apparently looking elsewhere for their bikes. Harley sales fell 12% last quarter, and were down 7% in 2017.

Yet Harley has time. It still owns half the U.S. motorcycle market and has been able to preserve its profit margins by largely avoiding the discounting that other manufacturers do. It’s also trying to build bikes that appeal to this new demographic, like an electric motorcycle that is expected to be unveiled sometime next year.

There’s plenty of room to quibble about which policies it should follow to regain traction. But with such a big lead over the competition, it can afford to take the time to get it right. Trading as it does at only 12 times its free cash flow, it is a bargain stock that could roar ahead when it gets itself kick-started again.

Best Undervalued Stocks To Watch For 2019: Zafgen, Inc.(ZFGN)

Zafgen’s share price jumped 45% this week. There were three notable stories for the biotech this week — two of them that expectedly boosted the stock but one that surprisingly seemed to help.

On Monday, Zafgen held a conference call to discuss positive results from a phase 2 clinical study evaluating ZGN-1061 in treating type 2 diabetes. The company also reported encouraging nonclinical data for the drug in potentially treating NASH. In addition, Zafgen announced on Monday that it was being added to the Russell 3000 index.

The biotech decided to take advantage of its climbing share price that resulted from those announcements. On Wednesday, Zafgen stated that it would conduct a secondary stock offering. The next day, the company announced the price of that stock offering and that the gross proceeds were expected to total $60 million. Most stocks would fall on news of a stock offering since the issuance of new shares dilutes the value of existing shares. Zafgen, however, saw its stock price continue to rise — a good sign of investors’ bullishness about the company’s prospects.

Best Small Cap Stocks To Own Right Now

The market has pummeled master limited partnerships (MLPs) over the past few years due to the impact the oil market downturn had on their operations and business model. Among the hardest-hit have been oil pipeline MLP Plains All American Pipeline (NYSE:PAA) and gas pipeline giant Energy Transfer Partners (NYSE:ETP), both of which have lost more than half their value over the last three years. That persistent slump comes even though their turnaround strategies are beginning to gain steam. While these companies still have some work to do before they’re back on solid ground, both could deliver significant returns as they complete their plans and the oil market continues rebounding over the next few years. That upside potential makes them compelling options for investors with a higher tolerance for risk.

Best Small Cap Stocks To Own Right Now: MPLX LP(MPLX)

The market gave income-seeking investors a gift in June by selling off units of MPLX(NYSE:MPLX), a midstream master limited partnership (MLP). For the month, the pipeline company inexplicably lost about 5% of its value, pushing it down about 4% for the year. Because of that, it trades at an attractive valuation and now yields 7.3%. Those are just some of the factors that make it a compelling income stock to consider buying this month.

A strong foundation

With last month’s sell-off, MPLX now trades for less than 11 times cash flow, slightly below the average of most large MLPs. Adding to its appeal is that the company currently generates enough cash to cover its high-yielding distribution by a comfortable 1.29 times, which is well above average in the MLP space. Meanwhile, the company anticipates that it can maintain more than a 1.2 coverage ratio over the long term.

A close-up of a stack of $100 bills.

IMAGE SOURCE: GETTY IMAGES.

Adding further support to the company’s ability to sustain its high-yielding distribution to investors is the fact that it generates very stable cash flow because long-term, fee-based contracts underpin the bulk of assets. In addition, the company has a strong balance sheet backed by investment-grade credit metrics that are near the top of its peer group. These metrics place it among the elite MLPs.

Best Small Cap Stocks To Own Right Now: Marathon Petroleum Corporation(MPC)

There are always going to be a lot of questions whenever a company makes a monumental acquisition like Marathon Petroleum’s pending purchase of Andeavor. The $23 billion deal will make Marathon the largest oil refining and marketing company, but there are, of course, questions about integrating the business and wringing out the $1 billion in operational and revenue synergies that management says it can achieve. Then, there is the fear that the company overpaid.

I can’t put those doubts to rest, but one thing Marathon Petroleum’s management has shown over the past few years is the ability to run an efficient refining operation that churns out lots of cash. Taking over Andeavor and its large refining footprint in the Permian Basin and on the West Coast will give Marathon a lot more optionality when sourcing crude oil and distributing fuel. 

One thing that will be working in Marathon’s favor during this integration period is that it is an incredibly lucrative time to be in the refining business. Today, the price of domestic crude (West Texas Intermediate) sells at a steep discount to the international benchmark price (Brent). Even better, crude oil coming down from Canada (Western Canadian Select) sells at a significant discount to WTI, so companies with the ability to handle these two particular types of crude stand to benefit immensely since they will be able to source these heavily discounted feedstocks. Having ample cash flow will allow Marathon to invest in the integration rather easily while continuing its trend of handsomely rewarding investors with dividends and share repurchases.

There are several things working in Marathon’s favor right now, yet the stock has a price-to-earnings ratio of only 10, which seems more than reasonable even if the refining business isn’t as great as it has been over the past few quarters.