You don’t have to pay three-digit sums to find compelling investing opportunities. It’s time to look outside the box at some cheap stocks top analysts are cheering right now.
Among the stocks that are getting the thumbs up are three that show a strongly attractive profile for retail investors: an initial price below $10 per share, a Strong Buy rating from the Street, and a triple digit upside potential.
We’ve used the TipRanks database to pull up these stocks and find out what else makes them so compelling. Let's take a closer look.
RedHill Biopharma (RDHL)
The first stock we’re looking at, RedHill Biopharma, is a biopharmaceutical firm that focuses its research efforts on gastrointestinal illnesses. The company has an active product line – 6 drug candidates at the clinical stage of research and development, and three products with approval in the US or globally and now in the commercialization process.
The three drugs with approval are Movantik, a treatment for opioid-induced constipation (a common side effect) which is approved for use globally but excluding Europe, Canada, and Israel; Talicia, a treatment for H. pylori infection (a common cause of stomach ulcers) which received FDA approval in November of 2019; and Aemcolo, a treatment for ‘traveler’ diarrhea, which has a license for exclusive use in the US.
These three drugs saw growth in prescriptions and market share during 2020, and in the full-year results RedHill reported top line revenues of $64 million with a gross profit of $27.5 million. In March of this year, the company reported having $100 million in cash on hand.
Having plenty of cash and a profitable product line puts RedHill in a solid position to continue its development activities. The company has several novel therapeutics in the pipeline as potential treatments for COVID-19. These include Opaganib, which is in an ongoing Phase 2/3 study on hospitalized patients; RHB-107, which is also in an ongoing Phase 2/3 study, but for non-hospitalized patients. The clinical pipeline also includes RHB-204, which is in a Phase 3 trial as a treatment for pulmonary NTM disease.
All of this caught the attention of analyst Raghuram Selvaraju from H.C. Wainwright, who titled his initiation of coverage report on this stock, ‘A Trifecta of Products With a Pipeline Punch.’
"From our vantage point, RedHill is building the next leading gastroenterology-focused specialty pharmaceuticals franchise in the U.S. market, while also advancing an extensive pipeline of rapidly-maturing drug candidates in an array of fields including oncology, respiratory conditions and infectious disease," Selvaraju noted.
The analyst continued, "In our view, Movantik, Talicia and Aemcolo alone could generate peak annual sales of $1.1B by 2028. Opaganib, upamostat and RHB-204—the only components of RedHill's extensive pipeline that we currently model—could contribute over $400M in revenue in the early 2030s, with RHB-204 potentially providing a durable long-term revenue stream beyond 2040 if pending patent claims are issued. We believe, therefore, that total sales of the products that we forecast could enable RedHill to sustain a >$1B revenue base for a lengthy period of time."
In line with his optimistic take, Selvaraju rates RDHL a Buy, along with a $23 price target. This target suggests the stock will be changing hands for a 231% premium a year from now. (To watch Selvaraju’s track record, click here)
Overall, based on all the above factors, Wall Street analysts are thoroughly impressed with RDHL. It boasts 100% Street support, or 4 Buy ratings in the last three months, making the consensus a Strong Buy. Shares are selling for $6.94 each, and the average target of $20.50 indicates a possible upside of 195% by next year. (See RDHL stock analysis on TipRanks)
Freeline Therapeutics (FRLN)
The next stock, Freeline Therapeutics, is working on gene therapies for debilitating, chronic diseases, including bleeding disorders. The company has four drugs in the development pipeline, two as treatments for hemophilia, one for Fabry disease, and one for Gaucher disease. Freeline follows a proprietary liver-based investigational gene therapy approach in its research.
Three of the company’s drug candidates are in clinical trials. FLT190, under investigation as a treatment for Fabry disease, is in a Phase 1/2 dose-finding study, with data expected to be presented before the end of this year. FLT201 is also in a Phase 1/2 dose-finding study, for Gaucher disease. This study is expected to be in the clinic before the end of this year. Finally, FLT180a, a drug candidate under investigation as a treatment for hemophilia B, is in a Phase 1/2 dose-confirmation study, and is on track to initiate trial sites by year’s end.
Among the bulls is H.C. Wainwright analyst Patrick Trucchio who is upbeat about the prospects for the company's Gaucher program.
"With limited competition, we believe the Gaucher program is Freeline's most valuable program… Freeline presented positive data at the WORLD Symposium… We believe that these data suggest FLT201 may be able to deliver sustained GCase expression in difficult-to-reach tissues. Furthermore, we believe learnings from data generated in humans to-date in the FLT180a and FLT190 programs, particularly around dosing and immune suppression, could help accelerate the FLT201 program… We estimate FLT201 could generate aggregate revenues of more than $8B; risk-adjusted, we estimate this program is worth $12/share," Trucchio explained.
The analyst summed up, "We believe a recent sell-off in FRLN shares… has created a compelling buying opportunity ahead of data updates on FLT180a, FLT190, and FLT201."
To this end, Driscoll rates FRLN a Buy along with a $30 price target. Should his thesis play out, a potential upside of ~257% could be in the cards. (To watch Trucchio’s track record, click here)
Trucchio is not alone in taking a bullish view here; there are 6 recent reviews of this stock and all are positive, making for a unanimous Strong Buy consensus rating. The shares are priced at $8.41 with an average price target of $24.50 implying an upside of 191%. (See FRLN stock analysis on TipRanks)
Last but not least is Clene, a clinical-stage biopharmaceutical company pursuing a unique track in the treatment of neurodegenerative diseases. The company uses nanotechnology to treat bioenergetic failure, and underlying factor in many neurological conditions. The company is developing bioenergetic nanocatalysts, a new class of drugs, to ‘jump start’ neurorepair through an energy-enhancing bioenergetic catalysis. In short, the company’s approach is to improve bio functions at the cellular level, so that the body can repair itself.
Clene has four drug candidates it its pipeline. The leading one, CNN-Au8, is described as a concentrated nanocrystalline gold (Au) suspension that drives critical cellular bioenergetic reactions in the central nervous system. CNN-Au8 is undergoing several concurrent clinical trials, including a Phase 3 trial for amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease) and Phase 2 trials for multiple sclerosis (MS) and Parkinson’s disease. All of these are progressive, chronic, degenerative conditions of the neuromuscular system.
The Phase 3 trial of CNN-Au8 reached the 50% enrollment milestone during Q1. Full enrollment is expected before the end of this year, and topline data is expected to become available during 1H22. Further updates on the company’s various other clinical trial programs are scheduled for later this year.
This company went public in December of last year through a SPAC merger transaction. The merger, with Tottenham Acquisition I Limited brought proceeds of $31.9 million, and saw CLNN shares debut on the NASDAQ on December 31 at $9.01 per share.
Covering CLNN for Cantor Fitzgerald, analyst Charles Duncan set an Overweight (i.e. Buy) rating and a $22 price target that indicates room for ~129% share appreciation from the current $9.63 share price. (To watch Duncan’s track record, click here)
“We see the non-specificity of ‘Au8 as a positive for broad applicability to a range of diseases in which oxidative stress and metabolic dysfunction is a key driver of pathophysiology. In addition, although crystalline gold has long been thought to have metabolic activity, it is not until we’ve seen the convergence of deeply scientific knowledge of nanocrystal technology with management capabilities in neurobiology and drug development, that we’ve been compelled to consider the therapeutic potential of gold in the treatment of neurodegenerative diseases," Duncan opined.
The analyst added, "Clene owns patented technology which enables gold nanocrystals to form into specific shapes that are particularly conducive to facilitating nanocatalytic activity and filtering toxic particles from the gold surface to drive differentiated clinical profile, potentially opening the door to broad deployment within medicine.”
In its short time on the public markets, CLNN has attracted 4 analyst reviews – and all are positive, making the analyst consensus a Strong Buy. The stock has an average price target of $22.25, suggesting a 131% one-year upside from current levels. (See CLNN 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.