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Billionaire Ken Griffin is betting on these 3 “Strong Buy” stocks
Stocks have surfaced since late October, buoyed by elections that may offer stability and news that effective vaccines against the novel coronavirus are closer than we thought. The rapid market shifts are enough to make investors dizzy – or at least to get them to turn to the experts to understand the financial landscape. In times like these, the legends can provide guidance. We’re referring to the people who changed the way we play the investment game, which is Ken Griffin. Ken Griffin has a knack for math and finance. Since he started trading stocks from his Harvard dorm in 1987, Griffin has built a personal fortune of over $ 15 billion – and made a name for himself on Wall Street as a giant in the hedge world. Although he is personally withdrawn, his investment decisions remain public and following Ken Griffin’s stock decisions is a viable investment strategy. Griffin notices the market decline last winter and describes the general recovery since March as “a macro trader’s dream”. Looking ahead to the elections, he sees the results as positive for the markets. He believes that a divided government, along with a narrower democratic majority, will empower the centrists and help avoid “crippling” tax increases. With that in mind, we wanted to take a closer look at three stocks that Griffin’s Citadel fund recently added. As we traversed the tickers through TipRanks’ database, we learned that each of them has a consensus rating of “Strong Buy” from the analyst community and has tremendous upside potential. Kadmon Holdings (KDMN) First up, we have Kadmon, which is focused on developing drug treatments for immune and fibrotic diseases, and like many clinical research companies, this is more about potential than profit. Kadmon has two drugs in the pipeline – Belumosudil (KD025), which is late-stage in the treatment of chronic graft-versus-host disease (cGVHD) and systemic sclerosis; and the experimental KD033, which is being investigated as immunotherapy for cancerous tumors. A new drug application (NDA) has been filed with the FDA for belumosudil at cGVHD and is currently under review. In the meantime, a phase 2 study in systemic sclerosis is ongoing and a small open-label phase 2 study is expected to begin in Q1 21. In addition, KD033 is currently in the phase 1 study in metastatic and / or locally advanced solid tumors. An active pipeline – especially one in which drug candidates are steadily advancing – is sure to catch investor attention. Among the fans is Ken Griffin. 924,309 shares were bought by Citadel in the third quarter, with the total holding now at 6,587,531 shares. The position is valued at more than $ 24 million. Thanks to the company’s promising pipeline and its share price of $ 3.80, Mizuho analyst Mara Goldstein believes investors should get into the action. “Belumosudil, a novel ROCK2 inhibitor, has successfully completed a central program (ROCKSTAR) for chronic graft versus host diseases and has initiated filing with the FDA. We see in this notice US sales of $ 628 million in 2030, which we believe will not be fully appreciated in the KDMN valuation […] We also see potential opportunities from additional indications and other candidates with potential for valuation deflation, ”noted Goldstein. For this purpose, Goldstein rates KDMN with a Buy and a price target of USD 13. This goal gives Goldstein’s confidence in KDMN’s ability to rise 246% from current levels. (To see Goldstein’s track record, click here.) Do other analysts agree? You are. In the last three months only buy ratings (4) were issued. Hence the message is clear: KDMN is a strong buy. Given the average price target of $ 13.75, stocks could rise 266% over the next year. (See KDMN stock analysis on TipRanks.) K12, Inc. (LRN) Next on our list of Griffin Picks is K12, a company in the education management organization niche – or in other words, a curriculum and online provider Educational resources Learning as an alternative to traditional school systems. K12 was founded in 2000 but held its own during the Coronavirus crisis in 2020 when social lockdown guidelines shifted students towards homeschool and online venues. The numbers show this as much as they can. K12 posted revenue of $ 371 million for the third quarter (FY Q1), up 37% from the previous quarter and an even more impressive 44.3% year over year. The company’s general education business was $ 313.8 million, up 34.4% year over year. The EPS increased sequentially by 150% from 12 cents in the second quarter to 30 cents in the third quarter. Griffin saw the potential of K12 in the current environment when he bought 447,703 LRN shares in the third quarter. Griffin now owns over 496,000 shares in the company, and that stake is valued at nearly $ 11.9 million. The analyst Alexander Paris from Barrington takes an optimistic stance on this share. Paris writes: “Management is cautiously optimistic that it can grow as it focuses on student retention (which has been steadily improving over the past few years) and its career learning initiatives. Investors are attracted to its robust distance learning model and see potential benefits from COVID-19, which will drive demand for its services in the medium to long term. “In line with these comments, Paris rates the stock as outperforming (ie buying). His target price of $ 60 shows his confidence in a 150% uptrend for the coming year. (To see Paris’ success story, click here.) This is again a stock with a unanimous consensus rating for strong buy, backed by 4 recent analyst ratings. The stock has an average target price of $ 49.33, indicating an upward movement of 106% from the trading price of $ 24. (See K12 stock analysis on TipRanks) Overstock (OSTK) Overstock is an online retailer that started twenty years ago after the dot.com bubble. Ironically, it started out as an e-commerce company selling inventory assets from failed e-commerce companies. Overstock is still active in the residual stock area today, but also sells new goods in the niches for bedding, furniture and home decor. Overstock beat earnings and sales estimates in the most recent quarter. The EPS was expected to lose 22 cents, but turned in a 50 cents gain. The bottom line is that sales increased 110% year over year to $ 731.7 million. Obviously, Overstock has benefited from the corona pandemic that has spurred more online retailing, and OSTK stocks have benefited from it too. The stock is up an astronomical 707% since the start of the year, even after slipping significantly from its late August high. A discount store with a strong online presence is a clear opportunity in the current climate, and Griffin took it. His new position is OSTK with a total of 110,281 shares currently valued at $ 6.3 million. The 5-star analyst Peter Keith writes for Piper Sandler: “[T]Returns in the fourth quarter “stay strong”, suggesting that continued growth of ~ 100% in the fourth quarter is quite possible. New customer growth was + 141% YoY, and OSTK saw a sequential improvement in the repeat purchase rate for new customers. The analyst concluded: “The valuation at <1.0x NTM EV / S seems very cheap to us, especially given the fact that a ~ net cash position of $ 490 million, which is ~ 18% of market capitalization. We would be aggressive buyers of the stock at its current level. "Keith rates OSTK overweight (i.e. buy) and his target price of $ 140 implies an uptrend of 145% for the next 12 months. (To see Keith's track record, click here.) Overall, Overstock's consensus rating for strong buy is based on 4 buy and 1 hold, the stock is selling for $ 57.10 and the average target price of $ 101 suggests it has 76% growth potential for a year. (See OSTK stock analysis on TipRanks.) For good ideas To find attractive valuations for trading stocks, visit TipRanks 'Best Stocks to Buy, a newly launched tool that brings together all insights into TipRanks' stocks. Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The content is intended to be used for informational purposes only, it is very important that you do your own analysis before making any investment.