After the year’s early rally appeared to hit a brick wall in recent times, the markets seem uncertain which direction to take next, making the seesawing conditions not easy for investors to navigate.
Against such a backdrop, maybe the best solution for investors is to follow in the footsteps of legendary Wall Street names – ones like Israel Englander.
The Millennium Management Chairman and CEO founded the hedge fund in 1989 with $35 million and now the firm is an almost $53 billion going concern, so he knows a thing or two about investing. Recently, Englander has been busy padding the portfolio with some big buys, and we’ve tracked down two of his recent purchases.
Do these choices sit well with the Street’s stock experts? Turns out they certainly do. According to the TipRanks database, both are rated as Strong Buys by the analyst consensus. So, let’s see why these names are drawing plaudits right now.
Dexcom Inc (DXCM)
The first Englander-backed stock we’ll look at is medical device maker Dexcom. The San Diego, California-based company makes continuous glucose monitoring (CGM) systems to be used by diabetes patients. The company’s solutions include wearables the Dexcom G6 and the more recent Dexcom G7, a small wearable sensor that every 5 minutes sends real-time glucose readings to a user’s smartphone and which the FDA recently cleared for usage by people with all types of diabetes ages two years and older. The company touts the product as the most accurate CGM offering on the market.
Diabetes is not only a chronic disease but an increasingly prevalent one too. Dexcom’s products have been growing in popularity as seen by the steady sales gains made by the company.
This was evident again in the latest quarterly statement – for 4Q22. Dexcom dialed in revenue of $815.2 million, amounting to a 16.8% year-over-year increase and meeting Street expectations. There was a conclusive beat on the bottom-line as adj. EPS of $0.34 came in ahead of the $0.28 forecast. The company also stuck to its previous 2023 guidance that calls for 15%-20% growth on the topline and gross margins of 62%-63%.
Englander obviously sees plenty to like here. In Q4, he upped his stake in the company by more than 200% with the purchase of 2,658,077 shares. He now holds a total of 3,890,649 shares, which at the current share price are worth $431.9 million.
Mirroring Englander’s confidence, Piper Sandler analyst Matt O’Brien says Dexcom is a ‘favorite name for 2023’ and highlights several reasons to get on board.
“While DXCM has continued to trade sideways since November following its strong Q3 earnings, we think there is room for significant appreciation from the domestic G7 rollout, continued OUS expansion and the basal opportunity (Basal-IQ Tech uses a Dexcom G6 sensor) leading the way. Better than expected volumes and strong GM leverage give DXCM the opportunity in our view to be a beat and raise story as we move through 2023,” O’Brien opined.
Unsurprisingly, then, O’Brien rates DXCM shares an Overweight (i.e. Buy), backed by a $150 price target. This target brings the upside potential to 35%. (To watch O’Brien’s track record, click here)
Most agree with O’Brien’s thesis. Based on 10 Buys, vs. 3 Holds, the stock claims a Strong Buy consensus rating. Going by the $129.92 average target, the shares will climb 17% higher in the year ahead. (See DXCM stock forecast)
SBA Communications (SBAC)
On to our next Englander-endorsed name is SBA Communications (SBAC), a real estate investment trust (REIT) but a unique one at that. The Boca Raton, Florida-based company owns and operates wireless communications infrastructure and in fact is one of the largest providers of communication tower space in the United States, as well as having operations in Central America, and Brazil, Africa, and the Philippines. Its main focus is geared toward leasing of antenna space on its communications sites to a host of wireless service providers, including Verizon, AT&T, and T-Mobile.
SBAC’s solid position is reflected in the company’s steadily rising revenues and earnings over the past few quarters. In the most recently reported quarter, for 4Q22, revenue rose by 15.3% from the same period a year ago to $686.1 million, beating the Street’s call by $4.81 million. However, while net income increased significantly from $48.9 million in 4Q21 to $102.6 million and resulting in $0.94 per share, the figure fell short of the $1.11 expected by the analysts.
Englander enters the frame here via a big increase to his holdings in Q4. He purchased 594,994 shares in the quarter, upping his stake by almost 300% and now holds a total of 797,089 shares, at present worth north of $206 million.
Englander is obviously upbeat about SBAC’s future and so is Raymond James analyst Ric Prentiss, who writes: “SBAC is our current preferred tower stock due to its: 1) larger exposure to U.S. towers; 2) higher quality AFFO; 3) longer runway for strong dividend growth (the company currently pays a quarterly cash dividend of $0.85 per share); and 4) proven ability to opportunistically allocate capital including stock buybacks.”
Based on that assessment, Prentiss rates SBAC a Strong Buy and has a price target set at $334. Should that figure be met, investors will be sitting on returns of ~29% a year from now. (To watch Prentiss’s track record, click here)
Turning now to the rest of the Street, where SBAC gets plenty of support. Barring two skeptics, all 10 other recent analyst reviews are positive, making the consensus view here a Strong Buy. Shares are expected to appreciate by ~27% in the year ahead, considering the average target stands at $328.82. (See SBAC stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.