After hitting new all-time highs in 2023, the S&P 500 is off to a slower start this year. The broad-based index is down 1.5% in the first week of trading. The first jobs report of the new year showed strong gains, which could cause the Federal Reserve to stand firm on the high interest rates it jacked up last year. That could make for a slower-growing economy in 2024. This backdrop has led to the stock picks to buy.
But no one knows which way it will really go so it’s best not to try and time. Same with the stock market. The long-term history shows the direction is inexorably higher and you should only put money into the market if you have a long investing horizon.
Bear markets are part of the cycle, and though painful, tend not to last very long. They are typically measured in months while bull markets go on for years. Since 1928, the Schwab Center for Financial Research found the average bear market lasted 15 months while the average bull market rally lasted three years. Even better, from 1970 on, bull markets tend to last more than six years on average.
Still, there are some stocks that Wall Street believes possess significant growth potential over the coming year. Although analysts can have widely divergent views on a stock’s future the following three high-octane growth stocks attracted upbeat estimates. These stock picks offer an upside ranging from 68% to as much as 200%, according to Wall Street.
Dynavax (DVA)
Biopharmaceutical Dynavax (NASDAQ:DVAX) develops and commercializes innovative vaccines for infectious diseases. Its flagship product is HEPLISAV-B, the first and only two-dose hepatitis B vaccine for adults in the U.S. and the EU. Hepatitis B is a serious liver infection that can cause chronic liver disease, cirrhosis, and liver cancer. HEPLISAV-B enables patients to complete their regimen with just two doses in one month.
Chronic hepatitis B is not very common in the U.S. with only about 880,000 people having the infection, according to the CDC. Some 296 million people worldwide, however, are believed to have it.
Dynavax has several factors that can drive its growth in the next year. First, HEPSILAV-B is the dominant therapy on the market with a 41% share. In the retail pharmacy market, its share is 53%. Sales soared 66% higher in the third quarter. The biopharmaceutical could also benefit from the CDC recommending universal vaccination for hepatitis B for adults 19 to 59 years old. One analyst believes that could expand the market opportunity for HEPSILAV-B to over $800 million by 2027.
Dynavax also has a robust pipeline of vaccine candidates that use its proprietary CpG 1018 adjuvant, which enhances the immune response and protection against various pathogens. These include vaccines for Covid-19, influenza, shingles, the plague, and more. This makes it one of those stock picks to buy.
That could be why Wall Street set a one-year price target of $24.80 per share on DVAX stock. That implies a 68% upside in its stock. Shares are up 40% over the past year and analysts clearly believe it has the momentum to drive even higher.
W&T Offshore (WTI)
Independent oil and natural gas producer W&T Offshore (NYSE:WTI) operates in the Gulf of Mexico but its stock acts like it’s in the Arctic Ocean. Shares are down 38% over the last 12 months as they suffered from lower oil equivalent production, rising expenses, and lower commodity price realizations. W&T posted a $0.01 per share profit in the third quarter, badly missing the $0.04 per share Wall Street was looking for.
Yet hope springs eternal as analysts still have a $9.55 per share consensus one-year estimate on the stock. Now only two analysts are covering W&T and one has a low-end estimate of $7.60 per share while the other pegs it north of $11 per share. In either case, we’re looking at a double in the stock price at a minimum. Is it reasonable to expect that?
The U.S. Energy Information Administration (EIA) projects world oil consumption to increase by 3.6% in 2024 and natural gas consumption by 2.5%. There is no let up in fossil fuel demand and W&T has a strong track record of exploration and development success. Although its production and prices realized are down year over year, they are up sequentially.
Free cash flow generation has been the oil and gas company’s primary focus for the past few years. Now with a strong balance sheet underlying it, W&T announced it will start paying a dividend of $0.01 per share. It has favorable market conditions behind it, a competitive edge in the Gulf of Mexico, and strong fundamentals. It is a value play in the energy sector, with a low valuation, high upside potential, and a new dividend to look forward to. This makes it one of those stock picks to buy.
Express (EXPR)
Fashion retailer Express (NYSE:EXPR) had a 2023 that more resembled W&T than Dynavax, and continues hoping for a retail sector recovery. With holiday sales only growing 3.1% this year, or about half the rate of 2022 according to Mastercard (NYSE:MA) data, that may be difficult. Express itself has had a bumpy run. While net sales rose in the third quarter, comparable sales were down 16% at retail stores but up 10% for e-commerce. Net losses also widened to $36.4 million.
Express is struggling and its top priority is restoring profitability to the company. It hasn’t had the product customers wanted, particularly coming out of the pandemic when consumer tastes changed towards casual wear. The retailer says customers will start seeing more of that in its stores and online. Yet investors shouldn’t expect much change initially. It’s still a very promotional environment and Express needs to participate. That will undercut margins and Express is still working down its bloated inventories.
So it’s surprising to see a $16.50 per share one-year price target on the stock. It does have a new CEO which could help drive some gains. The retail segment, however, is still very weak. It seems difficult to expect EXPR stock can surge 96% in the coming year.
Express might see its stock grow as it changes course to become more in sync with consumer tastes. It just might not be nearly as much as Wall Street forecasts. I wouldn’t be taking a big bite out of this stock anytime soon, making it one of those speculative stock picks.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
