Some of the most followed information in the stock market besides earnings releases are analyst recommendations. These are expert analyses that cover various companies that have a high potential for return on investment or industries in which they specialize. These recommendations can go from “Strong Sell” to “Strong Buy,” and most investors look for Strong Buy stocks to help bolster their portfolio growth.
While a strong buy may sound encouraging, it is imperative for investors to still conduct due diligence on these stocks to ensure that they can make informed decisions when making these investments. Now, let’s look at three Strong Buy stocks that we think have a strong potential for outperformance.
Vericel (NASDAQ:VCEL) is a severe burns and sports medicine company specializing in advanced therapies. The company has two segments of cell therapy products, MACI® (autologous cultured chondrocytes onporcine collagen membrane) for the treatment of cartilage defects and Epicel for permanent skin replacement of patients with severe burns that are 30% or more than their total body surface area. It also has rights for eschar removal for adults with partial-thickness and full-thickness burns under its NexoBrid (anacaulase-bcdb) North American rights. Last month, VCEL announced the commercial availability of its severe thermal burn treatment NexoBrid® and its positive Phase 3 study.
Its last financial quarter report, ending June 30, 2023, reported a $45.9 million revenue or 24% growth from its previous year’s revenue. The company has also achieved four quarters of more than 20% growth in its MACI® advanced therapy. EPS also beat analyst estimates by 15.38% and is expected to improve even further, according to its last earnings release. The company is scheduled to release its 3rd quarter earnings on November 8 and has a solid bullish outlook from analysts based on its “Strong Buy” stock recommendation. Analyst consensus expects the company to reach as high as $44.50 in the next 12 months.
InterDigital (NASDAQ:IDCC) is a wireless and visual technology research and development company whose primary business model focuses on licensing and innovating its patents to its customers. IDCC has around 28,800 patents and patent-related applications for video coding, wireless communication, and other entertainment products and services. Some of the company’s notable patents include Moving Picture Expert Group (MPEG) and Joint Video Expert Team (JVET). Its patented technology has been applied to various industries like consumer electronics, automotive, and cloud-based streaming.
The company has been experiencing strong momentum in its previous quarter’s earnings. IDCC’s third quarter reported a 116% increase in net income, while total revenue went up 22% YoY. EPS came in at $1.83, exceeding estimates by a whopping 105.62%. InterDigital is enjoying increased licensing agreements for its HVEC compression technology, with Lenovo notably signing up for smartphone utilization. The company has previously signed a license agreement with Alp Alpine, an electronic device manufacturer for automotive, home, and mobile modules and sensors for its HEVC patents. IDCC’s healthy patent licensing earnings and continued financial performance have put it squarely on analysts’ Strong Buy stocks list.
HealthEquity (NASDAQ:HQY) is a technology-enabled service company that assists consumers with healthcare-related spending and saving decisions. Its platform helps its clients with consumer-directed benefits (CDBs) and tax-advantaged health savings accounts (HSAs). It administers the Consolidated Omnibus Budget Reconciliation Act (COBRA), commuter, and other health benefits. The company offers an online-only automated investment to its members with its mutual fund investment platform. HQY also caters to bill payment and price comparison with its cloud-based solution to help clients grow their savings, earn wellness incentives, and make significant investment choices.
The company’s reported earnings per share have constantly exceeded expectations for several quarters, with the latest quarter report beating earnings estimates by 21.43%. Revenue increased by 18%, and non-GAAP net income by 62% YoY. HQY is expected to release its Q32024 earnings by December 5, 2023. HealthEquity partnered with Microsoft (NASDAQ:MSFT) early this year to modernize its system by using the cloud and an API-first architecture that will help with data unification and automation. The company expects that the partnership will scale the management of customer benefits easier and faster in real time. Analyst firms include HQY in their Strong Buy stocks list thanks to its solid earnings expectations and continued commitment to growth.
On the date of publication, Rick Orford did not have (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.