Barchart.com has highlighted two stocks from the Russell 2000 small-cap index that are rated as “strong buys” by Wall Street analysts and feature significant upside.
Vaxcyte
The biotech company Vaxcyte develops vaccines for infectious diseases, such as invasive pneumococcal infections, which include pneumococcal meningitis and bacteremia. While vaccines for these diseases already exist, they do not cover all dangerous and potentially deadly strains, the company explains. Phase III clinical trials (the final stage before potential approval) for Vaxcyte’s lead candidate, the VAX-31 pneumococcal vaccine, are scheduled to begin in 2025.
Growth stocks are often in the biotech sector, a traditional hub of innovation, Barchart.com noted. Since the beginning of the year, Vaxcyte stock has gained almost 40%, for a market capitalization of about $11 billion. According to MarketWatch, all 10 analysts covering Vaxcyte rate it a “buy.” Their average target price is $151.75 per share, 73% above the closing price on December 12 (when it closed with a 3.5% loss at $87.87 per share).
“Investors should be aware that clinical trials are fraught with uncertainties. As a result, Vaxcyte stock is ideal for investors with a high risk appetite and a long investment horizon,” Barchart.com pointed out.
Applied Industrial Technologies
Applied provides a wide array of products and solutions, such as electric motors, paints, lubricants, tools, and technical components, for critical industrial infrastructure.
Since the beginning of 2024, the company’s stock is up 55%, for a market capitalization of $10.3 billion. According to MarketWatch, among the nine analysts covering Applied, there are seven “buys” (“buy” and “overweight” ratings), one “hold,” and one “sell” (“underweight”). Their average target price is $292.86 per share, implying 8% upside versus the December 12 closing price of $268 per share.
In November, Applied announced that it had signed an agreement to acquire Hydradyne, a provider of hydraulic solutions. Baird analyst David Manthey described the deal as “a good strategic fit” and reiterated his “strong buy” rating for Applied. The company itself expects the Hydradyne acquisition to contribute about $260 million in sales. Recall that Zacks has included Applied in a list of stocks that could benefit from falling interest rates in the U.S.
In the fiscal-2025 first quarter (ended September 30), Applied reported net sales of $1.1 billion, basically flat year over year, and net income of $92.1 million, down almost 2%. Still, the company declared a quarterly dividend of $0.37 per share.
