Aside from biotechnology, there is no other industry that can produce rapid gains more than technology. In this piece, I am looking at three such stocks that analysts recently upgraded, and that may be beneath your radar.
Expensive But Rapidly Growing
I sure wish I would’ve known about Textura Corp (NYSE:TXTR) prior to today, as the company has doubled from its June 7 IPO price of $15. While you may think that all upside is priced into its stock, analysts from Oppenheimer, William Blair, Credit Suisse, and Barrington Research are all saying “not just yet!” As a result, the stock flew higher by 10% on Tuesday.
Underwriters and analysts are forbidden from initiating coverage on a stock in the initial weeks following its IPO — Tuesday was the first day that these firms were allowed – and all rated the stock “Outperform.”
The company, a provider of cloud-based construction industry software, could be “disrupting the collaboration-intensive commercial construction market,” according to Oppenheimer. All analysts share the same belief that Textura Corp (NYSE:TXTR)’s technology is replacing useful tools such as spreadsheets and on-premise apps.
As an investment, this is a $630 million company with revenue of just $27 million, but one that is growing at 60% year-over-year. Oppenheimer estimates its addressable market being $1.2 billion, and that it should triple in size over the next few years. Thus, this is a long-term growth play, and with the performance of other high-growth IPOs such as Workday Inc (NYSE:WDAY) and LinkedIn Corp (NYSE:LNKD), this is a stock that could soar higher.
This Stock Is Lighting up the Market
After losing 70% of its value in the 20 months prior to January 2012, the semiconductor company Cree, Inc. (NASDAQ:CREE) has since soared by 200%. Almost half of these gains have been created in 2013, and much of the new-found excitement is surrounding the company’s entrance into the LED bulb business.
While LED bulbs may sound boring, success would give Cree, Inc. (NASDAQ:CREE) more consumer leverage. According to Goldman Sachs, this is exactly what’s happening right now. Goldman upgraded the stock, saying that its channel checks indicate that LED bulb sales are far better than expected.
So far, these bulbs are only available at Home Depot, but success could help the company grow its network of distributors. The company made a big bet with these bulbs, hoping that a consumer desire to save money would lead to fundamental gains. According to Goldman, the bet might be paying off. Thus, with 20% growth and margins that continue to increase rapidly, I would seriously explore this high-flyer, as success in LED would result in fundamental gains that are not priced into expectations.