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Since the Coronavirus came into our lives this slice of the stock market has given ordinary people the chance to multiply their money by 96% in 21 days on JP Morgan.

Investing, Stocks  | August 27, 2021

We’re well into the second half of 2021, and with any luck at all we’ll soon see last year’s major headwinds fully relegated to the rear-view mirror. Even so, current conditions are looking up for the equity markets. The indexes are up – the S&P 500 has gained 20% this year, and the NASDAQ has gained more than 15% – and there’s an optimistic mood. With the Fed committed to its low-rate policy, at least for the short term, stocks are the place to look for returns.

This kind of mood can be self-perpetuating, and can breed the conditions that further share price appreciation. In short, it’s a go-to environment for growth stocks.

We all know that past performance is no guarantee, but it can be an indicator, especially consistent, long-term performance. But that is only one part of the growth stock picture. Investors should also look for Wall Street’s view – are the analysts impressed by the stock? And in addition to that, how does the upside potential look like?

Celldex Therapeutics (CLDX)

We’ll start in the healthcare industry, where Celldex is a clinical stage pharmaceutical company working on new, targeted therapeutic medications to address severe, even devastating, diseases whose current treatment regimens are simply not effective. The company’s pipeline is split into several tracks, including inflammatory diseases, oncology, and bispecific inflammatory and/or oncology pathways. Celldex works with monoclonal and bispecific antibodies, using antibody-based therapeutic modes to jumpstart natural immune responses, engages the immune system in the treatment process. Targeted diseases include pancreatic cancer and chronic spontaneous urticaria.

All of that may be a mouthful, the upshot is, this company has lined up multiple shots on goal – and has also had recent positive trial results.

The most recent data reported this past July, when the company’s drug candidate CDX-0159 showed significant positive results in a Phase 1b trial for efficacy against chronic inducible urticaria, a skin condition often associated with painful hives. Of 19 patients in the study, 95% showed a complete response and the remaining 5% showed a partial response. The drug was well tolerated, with only mild adverse effects. The company is currently enrolling for an additional Phase 1b study, with up to 40 patients, and aims to have results in the early summer of next year. The company’s CDX-1140 program is also progressing through Phase 1 studies. Celldex expects results from this program in metastatic solid tumors and B cell lymphomas by the end of this year.

The result: a share price that is up over 340% over the past 12 months. Cantor analyst Kristen Kluska is among those saying there’s more room for growth.

“With the stock up [340%] over the last 12-months, there has been significant attention around the name, particularly driven by the positive datasets reported from CDX-0159. We believe there are multiple inflection points over the next 12 months that could provide additional context around the potential of CDX-0159, along with updates across Celldex's oncology portfolio,” Kluska wrote.

The analyst added, “We spoke to multiple investors off the back of this data, and believe the findings strengthened the case that mast cells play a key role in chronic urticaria and the robustness of CDX-0159, based on the powerful responses, that exceeded expectations.”

In line with her upbeat comments, Kluska rates CLDX an Overweight (i.e. Buy) alongside a $61 price target. This figure suggests room for 21% growth ahead.

Wall Street generally is in agreement with the Cantor view here. Celldex has 4 recent reviews, and all are positive, making the Strong Buy consensus rating unanimous. The shares are selling for $50.28 and their $62.25 average price target implies a one-year upside of ~24%.

Beyond Air, Inc. (XAIR)

Next up is Beyond Air, another clinical stage biotech company. Beyond Air focuses on lung conditions, and the use of medical grade nitrous oxide (NO) as a treatment base. NO is hardly some exotic compound; it is a common gas made from nitrogen and oxygen, the two largest components of the very air around us. Beyond Air’s program is focused on the use of NO to treat lung infections, pulmonary hypertension, and even solid tumor cancers.

The company’s pipeline is based on delivery systems for delivering NO directly to the patient’s lungs. The gas is derived from ordinary air, and the system can deliver doses up to 400ppm, and can deliver that continuously or for set durations. The company's LungFit system is currently under FDA review for premarket approval (PMA) to treat persistent pulmonary hypertension of the newborn, and a commercial launch is planned for the fourth quarter of this year.

In addition, Beyond Air anticipates two other milestones this year. The interim results from the LungFit GO Nontuberculous Mycobacteria (NTM) lung infection at-home pilot study are expected in the fall of this year, and the company’s solid tumor program is expected to receive regulatory clearance for human trials by year’s end.

With so many catalysts coming up, and early testing showing promise, the stock has gained an impressive 98% so far this year. But would you believe it could go up another 65%? Ladenburg's Matthew Kaplan does. The analyst rates XAIR a Buy along with a $17 price target. 

“We remain confident that Beyond Air has set itself up to execute its timeline for commercial launch and label expansion. We believe the upcoming milestones could serve as significant potential catalysts for the stock," Kaplan noted.

XAIR has a unanimous Strong Buy analyst consensus rating, showing that Kaplan's view is no outlier. That consensus is based on 5 recent reviews of the stock. The stock’s average price target is $12.54, implying an upside of ~21% from the current trading price of $10.43. 

City Office REIT (CIO)

Let’s wrap up with a REIT, a real estate investment trust. These companies exist to buy, own, manage, and lease real properties of all types, residential and commercial. In addition, they are also frequent heavy investors in mortgage backed securities.

City Office is a US-based company, with most of its operations in major urban areas of the West and Southeast. The company’s portfolio boasts over 5 million square feet of leasable space, and features prime addresses in rapidly growing cities such as Dallas, Denver, Phoenix, Tampa, and Orlando.

The big recent catalyst for City Office came this month, when the company took a deal on August 20 to sell off its Sorrento Mesa office properties in San Diego. The deal is worth at least $576 million, and the company will realize the money into separate tranches – a payment of $395 million before the end of the year, and another of $181 million by February of 2023.

There are two key points to this deal for City Office. First, the company bought the buildings in question in 2017 – for just $116 million. So, the capital gain is impressive. And second, as of the end of Q2 this year, City Office had only $13 million in liquid assets against over $612 million in long-term debt. The proceeds from this sale will cover the bulk of that debt.

It’s no wonder then, that CIO spiked 24% on news of the sale. That gain was part of the stock’s overall gain of 104% over the past 12 months.

Craig Kucera, 5-star analyst with B. Riley, agrees that the sale is the main driver here, noting: “CIO... had entered into agreements to sell all of its assets in its Sorrento Mesa submarket (life science office properties and land) for $546M (net), considerably above the $278M value we attributed to the land-heavy assets in our prior NAV estimate… CIO may accelerate the sales depending on its ability to redeploy net proceeds from the asset sales. CIO will likely pick up considerable earnings accretion upon recycling capital from the Sorrento Mesa sales into other office asset acquisitions in 2022…”

Kucera gives CIO shares a price target of $22 to go along with a Buy rating. At current levels, his target implies an upside of ~35%.

This is another Strong Buy stock, although the analyst consensus is not unanimous. Rather, it’s a 3 to 1 split of Buys over Holds. The share price is $16.23 while the average price target stands at $17.50.

A revolutionary initiative is helping average Americans find quick and lasting stock market success.

275% in one week on XLF - an index fund for the financial sector. Even 583%, in 7 days on XHB… an ETF of homebuilding companies in the S&P 500. 

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