RedChip Nation’s Top 5 Small-Cap Picks for 2016
RedChip Nation’s top 20 stocks gained an average of 56% in 2015.
We’re now turning our focus to our next top stock picks, and our analysts have identified what they believe will be the top five performing stocks in the RedChip Nation in 2016.
Cancer Genetics (NASDAQ: CGIX)
First up is Cancer Genetics, an emerging leader in DNA-based cancer diagnostics. While CGIX achieved a significant number of milestones and reported strong financial performance throughout 2015, its stock has yet to properly reflect these successes.
As of its most recently reported quarter, revenues were up 104% year-over-year to $12.6 million, and its acquisition of Response Genetics in September is expected to add an additional $10 million to $12 million in annual revenue moving forward.
RedChip analysts currently have a price target of $14 per share on CGIX. With its shares trading just over $3 at the start of the year, this represents a potential upside of more than 300%.
Chanticleer Holdings (NADAQ: HOTR)
Chanticleer Holdings, which owns and operates restaurant brands in the U.S. and internationally, including Hooters and other brands in the fast casual space, is poised for big gains in 2016.
HOTR trades at just over 0.5x sales and its price-to-book is 0.9x. This represents a significant discount to peer comps such as Shake Shack (SHAK), Habit Burger (HABT), and Good Times Restaurants (GTIM), which trade at an average price-to-sales of 2.3x and average price-to-book of 3.8x. HOTR’s current multiples represent discounts of more than 75% to the average P/S and P/B multiples.
HOTR has a $55 million projected revenue run rate at year end 2015 and strong forecasted growth moving into 2016 with a growing number of locations in the U.S. and abroad. If the stock just trades in line with its peer group, investors could see gains of 400% or more.
Oasmia Pharmaceuticals (NASDAQ: OASM)
Oasmia Pharmaceuticals, a developer of new cancer drugs for use in humans and animals, completed a Phase 3 trial for a new chemotherapy drug (Paclical) that has demonstrated equal efficacy to Taxol and Abraxane (combined sales of $1.7 billion) while providing a superior risk profile and lower production costs. Celegene acquired Abraxis, the maker of Abraxane, for $2.9 billion in 2010, providing a possible indication of the potential value of Paclical.
Paclical has already been approved in Russia and has generated $9 million in initial sales. OASM anticipates CE Mark approval in late 2016 and U.S. approval in late 2017.
OASM’s technology platform can be applied to additional active pharmaceutical ingredients, and the Company is already scheduled to enter clinical trials for its next anti-cancer drug for breast cancer. Patient recruitment for this trial commences in January, setting the stage for milestone announcements moving forward.
The median market cap of similarly-staged peers is approximately $750 million, significantly higher than OASM’s current market cap of only $125 million, providing big potential gains for investors.
Apollo Medical Holdings (OTC: AMEH)
Apollo Medical Holdings provides medical management and healthcare coordination for a growing number of providers and patients. Increases in healthcare costs and the passing of the Affordable Care Act (ACA) have driven the need for companies that can both improve the quality of healthcare given and contain healthcare costs.
M&A activity by several large healthcare companies (Fresenius’s majority acquisition of Sound Physicians and Cogent, Rite Aid’s purchase of Urgent Care Centers, Humana’s acquisition of Metropolitan Health Network, and DaVita’s acquisition of HealthCare Partners), underscores the healthcare industry’s move toward an integrated care model.
Operating on a March 31 fiscal year, AMEH reported 196% year-over-year revenue growth in fiscal 2015 and generated 37% year-over-year revenue growth in the first half of fiscal 2016.
Value-based healthcare models offer high potential revenue growth, and going forward, we believe that AMEH will deliver strong EBITDA and net income as its business begins to mature and reach scale.
Our analysts have put a target price of $29 per share on AMEH. With the stock trading just under $5 per share today, this represents potential upside of more than 400%.
Eco-Stim Energy Solutions (NASDAQ: ESES)
Eco-Stim Energy Solutions is an environmentally-focused oilfield service and technology company providing proprietary field management technologies, well stimulation, and completion services to oil and gas producers drilling in the rapidly expanding international unconventional shale markets.
ESES is currently providing well stimulation and completion services to oil and gas operators in Argentina, a country which contains one of the world’s largest shale oil and gas resources. The government of Argentina has determined that the development of these vast resources is of highest national priority and has established oil and gas prices that are well above current international pricing to attract continued investment.
ESES currently has one frac spread operating in Argentina, and recent capital raises have given the Company the cash needed to aggressively expand its workforce, with three crews expected to be deployed by 2Q16. With revenue guidance of $16 million to $17 million for fiscal 2015, the addition of two more crews in the second quarter has the potential to more than triple annual revenue.
Four analysts have buy/outperform ratings on ESES, including Evercore ISI, FBR Capital, Roth Capital Partners, and Euro Pacific Capital with target prices of $9.00, $7.00, $7.00, and $7.00, respectively. With the stock trading for less than $3 today, this represents potential upside of up to 200% in the near term.
2015 Top Performers
As mentioned at the beginning of this article, our top performing stocks for 2015 returned average gains of 76%. When you drill down and look at the performance of the top five stocks in 2015, average gains soar to nearly 200%. Don’t miss your chance to put these types of gains in your portfolio. Visit the stock pages for each of top stock picks for 2016 and learn more about these exciting opportunities.
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