Heading into year’s end, the Street’s professional analysts are busy putting together their predictive models, working to give investors an idea just where the markets are heading. All in all, it would seem to be a positive picture; despite some recent volatility, the markets are still following the sustained upward trend they’ve been on since the spring of last year.
Writing from Oppenheimer, chief investment strategist John Stoltzfus leads the bulls. He sees gains of 13% in store for the S&P 500 index, predicting it will reach 5,330 by the end of next year. Stoltzfus acknowledges the headwinds – especially inflation. At a 6.8% annualized rate last month, the inflation rate is at a 40-year high. Stoltzfus sees bottlenecks in both the supply chains and the labor markets as the chief drivers of the rising prices.
On the other hand, Stoltzfus believes that the Federal Reserve’s likely shift in policy – from easy money to higher interest rates – will provide a lifting effect, so long as the Fed doesn’t administer too strong a dose of this medicine. He’s optimistic, thought, saying, “We do not expect the Fed to slam on the brakes to choke off liquidity but rather look for it to ‘pump the brakes’ as lightly as it can as it takes the mechanisms of emergency stimulus off gradually.”
We’ll hear from the Fed later this week. In the meantime, let’s check in with Stoltzfus’ colleagues among Oppenheimer’s stock analysts, who see two stocks poised to make gains next year, bringing investors the returns on the order of 90% or better. After running the two through TipRanks’ database, we found out that the rest of the Street is also standing squarely in the bull camp.
ESS Tech (GWH)
The first stock we’ll look at is ESS Tech, an emerging firm in an emerging sector – long duration energy storage. That may sound like batteries, and it is, but with a twist. ESS does not use traditional chemical batteries, which are prone to short life cycles, charge reduction problems, overheating, and fire hazards, and contain corrosive chemicals. Rather, the company is focused on iron flow batteries, using electron transfer from electrolyte liquids to store and release energy. The batteries have between 6 and 12 hours storage capacity before recharging – a big step up from current large-scale battery technology.
Use of long duration batteries offers the promise of a greener future. Iron flow batteries, which avoid the environmentally dangerous chemical compounds of traditional batteries, add cleaner tech to that. The system’s advantages include 20,000 charging cycles, over 20 years operating life, and the ability to both stabilize the existing electrical grid and accelerate the use of renewable power sources.
ESS is the first US long duration energy storage firm to trade on the pubic markets. The company entered the public markets through a SPAC transaction with ACON S2 Acquisition Corporation, a move that closed in October. The deal brought ESS some $308 million new capital, and the GWH ticker started trading on October 11.
This newly public stock caught the attention of Oppenheimer’s 5-star analyst Colin Rusch, who writes: “We view GWH as leveraging its proprietary iron flow battery technology platform into structural cost and performance advantages for stationary storage applications. We believe long-duration energy storage has a crucial role to play in enabling the migration of the global economy toward a zero-emissions future and see ESS’s solutions as providing critical power solutions with advantaged economics…. [We] see base unit cost and comparatively low incremental capacity costs, in addition to a lack of capacity fade, as enabling scalable unit economics.”
In line with these upbeat comments, Rusch initiated coverage of the stock with an Outperform (i.e., Buy) rating, and his $28 price target suggests it has room for ~90% upside over the next 12 months. (To watch Rusch’s track record, click here)
The bulls are clearly out in force for this one, as the Strong Buy consensus rating is unanimous, based on 4 recent positive stock reviews. Shares are selling for $14.69 and the $25.50 average price target indicates room for ~74% appreciation from that level over the coming year. (See GWH stock analysis on TipRanks)
Pliant Therapeutics (PLRX)
Now let’s move over to the biotech research field, where Pliant Therapeutics is working on new treatments for fibrotic diseases. These are a wide class of disease conditions, affecting numerous organs of the body and characterized by scarring. Pliant is working with drug candidates that offer promise of halting the scarring and the disease progression, and thus maintaining organ function in patients.
The company’s lead drug candidate, PLN-74809, is currently undergoing two clinical trials, each at Phase 2, for the treatment of idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC). These are chronic, progressive conditions of the lungs and liver, respectively, leading to eventual loss of organ function and death. PLN-74809 has received Orphan Drug Designation from the FDA for both indications.
The clinical trial on the IPF track has recently shown positive interim data, with clinically significant effects across several doses, and ‘greater than 50% target engagement.’ Also on the IPF track, a Phase 2a trial is on track to release topline data by the middle of next year. Turning to the PSC track, another Phase 2a trial is currently enrolling, and is expected to be completed by the end of next year.
The company also has two preclinical studies approaching the stage of Investigational New Drug submission. These two studies are looking at novel treatments in the fields of oncology and muscular dystrophy.
The active pipeline here has caught the eye of Oppenheimer’s Jeff Jones, who notes: “We see PLRX as an attractive opportunity to buy into a productive discovery and development platform targeting the integrin class of receptors. With lead candidate PLN-74809 in Phase 2 trials for two significantly underserved indications (IPF and PSC) and a clinical stage collaboration with Novartis we see a validated platform with significant upcoming clinical catalysts in 2022.”
Jones uses that outlook to back his Outperform (i.e. Buy) rating and $40 price target on PLRX. Shares could appreciate ~158%, should the analyst’s thesis play out in the coming months. (To watch Jones’ track record, click here.)
Again, we’re looking at a stock with a unanimous Strong Buy consensus based on 4 recent reviews. Pliant’s stock is selling for $15.53 and it has a $40.75 average price target suggesting an upside of ~162% over the next 12 months. (See PLRX stock analysis on TipRanks)
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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.