Looking for a stock that will gain at least 20 per cent over the next year? Look no further than GMP Securities. On Wednesday, GMP released a list of its highest conviction ideas in numerous sectors, including Technology and Healthcare where the bank has nine such stocks.
“How the world has changed! A mere nine months ago the Fed was in full tightening mode, with Fed Chair Powell declaring that “we are a long way from neutral“, GMP’s Head of Research Stephen Harris said in the report. “Since then, market expectations have moved dramatically and are now pricing in up to three rate cuts over the next year. Over the same period, the 10 yr Treasury yield has fallen from over 3.2% to 2.05%. No wonder the stock market has moved to new highs. The risks of a Fed policy mistake – too much tightening too soon – have dropped dramatically, while the odds of an extended cycle with no recession in North America for the next 2-3 years have greatly increased. North America continues to be the place to be for most investors. Asia remains in the crosshairs of trade wars, both real and potential, while Europe is mired in slow growth, financial instability, and political uncertainty. Falling bond yields globally and slowing economic growth mean investors should continue to pay up for stocks that can deliver earnings growth. In Canada, the political pendulum continues to swing towards a more pro-business outlook with right-of-centre governments now elected in seven of 10 provinces (up from two in early 2016) and a federal election coming in October. Any progress towards an improved investment climate generally and pipeline construction in particular should prompt a catch up rally in the S&P/TSX, which has badly lagged the S&P 500 in recent years.”
Here, in alphabetical order, are GMP’s top picks in healthcare and technology.
ATS Automation Tooling Systems (ATS Automation Tooling Systems News, Stock Quote, Chart TSX:ATA)
The firm has a $27.00 target on ATS, representing a return of 26.7 per cent at the time of publication. “Strong trend in automation with record low unemployment and rising wages,” GMP says. “ATS operates in the higher valued segments of Healthcare and EV.
Curaleaf Holdings (Curaleaf Holdings News, Stock Quote, Chart CSE:CURA) The firm has a $23.00 price target on CURA, which represented a return of 151.4 per cent at the time of publication.
“Largest US cannabis operator with valuation unjustifiably discounted vs. peers,” GMP says.
Descartes Systems Group (Descartes Systems Group News, Stock Quote, Chart TSX:DSG) The firm has a $59.00 target on DSG, representing a return of 20.9 per cent at the time of publication.
“Recent acquisitions driving growth and margin expansion amidst rising e-commerce and global trade complexity. More fire-power following $245mm equity raise,” GMP says.
Enghouse Systems Limited (Enghouse Systems Limited News, Stock Quote, Chart TSX:ENGH).
The firm has a $43.00 target on ENGH, implying a return of 22.8 per cent at the time of publication.
“M&A accelerating to record levels with $130mm deployed YTD. Quick turnarounds for Espial and Vidyo expected, and $145mm in cash still available,” GMP says.
Green Thumb Industries (Green Thumb Industries News, Stock Quote, Chart CSE:GTII).
The firm has a $32.00 price target on GTII, implying a return of 128.7 per cent at the time of publication. “Best-in-class operational execution with significant upside across several markets,” GMP says.
HLS Therapeutics (HLS Therapeutics News, Stock Quote, Chart TSX:HLS)
The firm has a one-year price target of $22.00 on HLS, implying a return of 27.6 per cent at the time of publication.
“Catalytic Vascepa asset validates management’s ability to source good transactions. Full value of the business is not nearly reflected in the share price, GMP says.
Stingray Group (Stingray Group News, Stock Quote, Chart TSX:RAY.A)
The firm has a one-year price target of $12.00 on RAY, implying a return of 81.2 per cent at the time of publication.
Market doesn’t believe in the NCC acquisition, but we do. We see $0.84 FCF/sh (25% CAGR) and attractive revenue synergies from advertising,” GMP says.
Valens GroWorks (Valens GroWorks News, Stock Quote, Chart TSXV:VGW).
The firm has a target of $10.00 on VGW, implying a return of 141.5 per cent at the time of publication.
“Cannabis extraction company with strong revenue growth ramp and visibility. Trading at ~5x CY20 EBITDA with sales forecasted to grow triple-digit % QoQ for next two quarters,” GMP says.
Zenabis Global (Zenabis Global News, Stock Quote, Chart ZENA-TSX)
The firm has a price target of $3.25 on ZENA, implying a return of 86.8 per cent at the time of publication.
“Value play in Cannabis at 7x EBITDA with operational excellence and solid partner feedback. Capital structure overhang is in the process of clearing up,” GMP says.