Quickel's Picks: Tech & Healthcare

04/26/2016 9:00 am EST


Stephen Quickel

Editor, US Investment Report

Our new stock picks include a number of promising small caps whose names you may not recognize but whose growth projections and price valuations appear quite attractive, explains Stephen Quickel, editor of US Investment Report.

We’re focusing on this because smaller caps have suffered more profit-taking in recent trading and our smaller cap Emerging Growth Stock model portfolio requires some fresh input.

The average new stock that meets our criteria trades at 93% of its 52-week high, indicating both market support and room to appreciate further.

Five-year-ahead earnings growth averages 22.1% a year, with a 32.5% average gain estimated for the next 12 months.

The average P/E ratio is 16.0 times estimated 2017 earnings, about the same as the S&P 500’s forward P/E of 15.8, and the average PEG ratio is a very attractive 0.72, well below the "ideal level" of 0.90 to 1.10.

In healthcare sectors we have added two small caps. Ligand Pharmaceuticals (LGND) of La Jolla, CA offers technologies that help other biotechs worldwide to develop new medicines.

Youthful management has boosted revenues from $75 million in 2015 to $160 million projected for 2017.

AMN Healthcare Services (AHS), based in San Diego, provides workforce and staffing services to healthcare clients in the US. Its shares trade at 8% off its 52-week high.

In technology sectors we favor large-cap Nvidia (NVDA), the computer visuals leader we have recommended successfully in the past, plus three newcomers.

One is NVDA’s Santa Clara, CA, neighbor Inphi (IPHI) which derives $300 million of sales from a broad lineup of analog and mixed-signal semiconductors.

Called a strong buy by 10 of 11 brokerage analysts, it trades at the top of its 52-week range but sports a sound 1.03 PEG ratio.

IPG Phototonics (IPGP) of Oxford, MA, makes laser products for materials processing and other uses worldwide. Revenues are approaching $1 billion on 21% a year expected earnings growth.

Mellanox Technologies (MLNX) is an Israeli-based fabless semiconductor company that deals in interconnect products for computing, data storage and communications applications. Its rapid earnings growth and modest P/E and PEG ratios caught our eye.

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By Stephen Quickel, Editor of US Investment Report

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