Over the past two months, mutual funds and hedge funds liquidated momentum stocks, triggering a self-reinforcing selloff. As a result, nearly every single biotech stock has been pushed aggressively lower. When this happens mispricings occur. Fund managers take profits even on stocks that have great fundamentals and huge upside.
So, given this sell off, which of those stocks present a great buying opportunity We ran a screen that looks for the best biotech stocks with the most upside potential.
First, we look for companies with a market capitalization greater than $200 million. For the second level of the screen, the companies must have more than three analysts covering the stock. Third, there has to be more than three analysts that have a price target on the stock. Finally, we want to find stocks that are trading at a huge discount to analyst consensus price targets.
In running this screen for the first of May, the following five stocks have hit our radar as potential home runs. These stocks have an average analyst price target that is at least 200% higher than its current share price.
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3) Ziopharm Oncology, Inc. (ZIOP) has a current share price $3.50. The consensus analyst target price is $11. That gives us a “street projected return” of 214%.
4) TherapeuticsMD, Inc. (TXMD) has a current share price $4.20. The consensus analyst target price is $13. That gives us a “street projected return” of 209%.
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Bryan Rich is co-founder of BillionairesPortfolio.com and CEO of Logic Fund Management, Inc.
