Buy These 2 Small Cap Stocks To Double Your Investment, Analysts Say
Let’s not beat around the bush too much. Ultimately, every investor wants to see a strong return on their spending. The stronger, the better.
The fact is that markets are based on a simple equation. Go for the safer bets, i.e. mega caps, and you are likely to win some money, although less likely to see huge wins. On the other hand, try your luck with a smaller, less established name and the rewards could be far greater. However, there is a catch; it’s a risky game and you’re much more likely to see the investment evaporate when you place a bet on the wrong horse.
This is where Wall Street analysts come in; Diving into the TipRanks database, we focused on two small-cap stocks that not only are considered strong buys by analyst consensus, but are also expected to double or even more over the coming year. . Let’s take a closer look.
AdTheorent Holding (ADTH)
Love it or hate it, the digital world will continue to advance on advertising. It is the essential ingredient that provides the bread and butter of so many digital activities. AdTheorent lives in this digital advertising space. The company, which was founded in 2012, provides customers with a digital media platform that uses machine learning to deliver personalized solutions and real value to advertisers and marketers.
It’s just one of many companies that jumped on the SPAC bandwagon last year. AdTheorent went public in December, through a merger with MCAP Acquisition Corporation. The move was approved by MCAP shareholders on December 21 and the symbol ADTH began trading on December 23. The move created a joint venture with an enterprise value of $775 million; since then, the stock has fallen and AdTheorent now has a market capitalization of $468 million.
Prior to the SPAC transaction, AdTheorent released its 3Q21 results. Results showed solid growth, with revenue and adjusted gross profit up 36% year-over-year. Revenue reached $39.5 million, adjusted gross profit was $25.5 million, and net profit increased 87% year-on-year to $1.4 million.
This new public action caught the attention of 5-star Canaccord analyst Maria Ripps, who notes her aversion to cookies and describes it as “growing in importance given the increased industry focus on consumer privacy”.
Ripps goes on to say of AdTheorent: “The company serves more than 300 advertising clients spanning major advertising agencies, smaller independent advertising agencies and brands looking to move their advertising capabilities in-house, with a growing focus on agencies and independent brands, which now generate around three-quarters of the company’s revenue.With the stock down from its SPAC price, largely reflecting the massive tech sell-off, we believe that the current valuation creates an attractive entry point…”
It should come as no surprise, then, that Ripps is staying with the bulls. He rates ADTH as a buy and his $12 price target implies around 120% upside potential from current levels. (To see Ripps’ track record, Click here)
Overall, in its short time in the public markets, ADTH stock garnered 4 analyst reviews, all positive, to support its Strong Buy consensus rating. The shares are selling for $5.46 and the mid-price target of $12 is the same as Ripps. (See ADTH stock forecast on TipRanks)
Ayala Pharmaceuticals (AYLA)
The second stock we will look at is a clinical-stage biopharmaceutical company that is researching new cancer treatments. Ayala is at the forefront of a new approach to cancer treatment that will provide specific therapies for patients with rare and aggressive diseases. The Company’s treatment technology is based on gamma secretase inhibitors, as a means of disrupting tumor growth by activating the Notch pathway. This clinical-stage researcher is firmly established in the small-cap segment, with a market capitalization of just $92 million.
The Company’s development pipeline includes two drug candidates. AL101 is the first, and last September Ayala presented preliminary clinical data from the 6mg dose cohort of the Phase 2 ACCURACY trial. This trial evaluates the drug candidate in the treatment of R/M ACC (recurrent/metastatic adenoid cystic carcinoma); preliminary data showed a disease control rate of 70% in this dose cohort.
Also on AL101, the company released preclinical proof-of-concept data showing that the drug demonstrated increased activity when combined with cancer therapies already approved for ACC.
Ayala’s most advanced clinical trial involves AL102. The company recently announced that it is on track to release initial interim data from Part A of the Phase 2/3 RINGSIDE trial. This pivotal trial is testing the drug as a treatment for desmoid tumors and interim data is due to be released in the middle of this year. Part B will start after Part A dose selection.
The clinical studies and the new therapeutic approach are the key points according to Raghuram Selvaraju of HC Wainwright.
“In our view, Ayala represents an underrated story in the field of precision oncology, given its focus on gamma-secretase inhibition – a scientifically validated mechanism in the context of modulating activation of the Notch pathway – and its deployment of two lead candidates (AL101 and AL102) on five types of cancer so far incurable with limited existing treatment options….All indications targeted by Ayala constitute recurrent or metastatic disease; patients studied are considered relapsed or refractory, with a history of limited or no impact achieved with existing approved drugs.Thus, we believe Ayala is focused on delivering differentiated impact in areas where needs unsatisfied are high,” Selvaraju said.
Consistent with these comments, Selvaraju rates AYLA as a Buy with a price target of $18. This number suggests the stock will change hands at a premium of around 171% a year from now. (To see Selvaraju’s track record, Click here)
Overall, with 3 analyst opinions on the stock on file, all positive, the message is clear: AYLA is a strong buy. Based on the average price target of $19, the shares could rise around 187% over the next twelve months. (See AYLA stock forecast on TipRanks)
To find great stock trading ideas at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ stock information.
Warning: The views 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 to do your own analysis before making any investment.