As I write this article the S&P is taking another shot at all time highs at 3,200. And what’s not to like about a market that has provided a nearly 30% gain this yea?

Unfortunately as we look forward a lot of the stocks are now fully valued…and some actually obscenely overvalued. Thus, one has to work a bit harder to find those stocks with truly attractive upside potential in 2020.

Gladly, that is exactly what I set out to do today…to look under every rock for the rare few stocks with the kind of upside that truly gets our heart racing. From that research 11 stocks emerged that have the makings of big winners this coming year.

Aimmune Therapeutics (AIMT) is a great example. This biopharma stock has impressive earnings prospects leading the average Wall Street analyst to put out a target of $55.50 which is a whopping 75% above current levels.

However, as we did deeper we find that the 5 Star analyst from Piper Jaffray, Christopher Raymond, sees $60 as a more reasonable 12 month destination for AIMT. Even better is the $79 target on Aimmune applied by the analyst at Wedbush…that is nearly 150% above current levels.

Another biopharma catching analyst attention is Dermira Inc (DERM) with 57.3% upside to its average target. As the name implies they are focused on therapies for various dermatological (skin) conditions.

What’s impressive is that DERM has nearly tripled in price from the fall 2019 lows. Even with all that momentum packed inside shares after the most recent earnings beat, the targets of $20 to $25 are quite common. So still plenty of reason to pocket DERM shares even now.

Now I know quite a few of you might be saying that biotech stocks have too much risk implied in them depending on forthcoming FDA approvals. So lets move on to eXp World Holdings (EXPI) that is an exciting cloud based play for the real estate market.

Thanks to a recent 40% earnings beat EXPI has been on a roll the past few months as investors see them starting to realize tremendous growth potential. With that came a flurry of raised target prices and now expectations for 58% upside to fair value this coming year.

EXPI seems to have lower risk than many of the others on the list, while at the same time enjoying the most improvement in its earnings outlook. This is best expressed by the recent increases in earnings estimates for this year and next (23% and 60% respectively.)

At the end of the article I share all the specifics on how I uncovered these 11 undervalued gems. Just remember for now that each is packed with top grades from the POWR Ratings system. To see their individual ratings, then just click on the ticker for each below:

Want more great stock picks? Then check out these additional resources:

POWR Rating A (Strong Buy) Stocks

Reitmeister Total Return portfolio

And here are specifics on the stock screening process I went through to uncover these 11 stocks with the most upside.

• 8,000+ US based stocks to start with.
• 2,254 with POWR Rating of A or B. As you probably know by now, this is our exclusive rating system that is built on top of 4 different scores of a stocks attractiveness. Everything from long term to short term view. Plus Industry Rank and how well it stacks up inside its industry. When rolled together it points to stocks experiencing the most healthy momentum at this time and thus likely to stay on the rise.
• 654 stocks that had earnings estimates not heading lower for this year and next. You can see how this important growth health check knocked out 70% of the stocks. Just think about it this way, a company whose earnings outlook is going down is likely managed poorly and likely to miss earnings again in the future. That is what creates a value trap (a cheap looking stock that only heads lower and lower). This vital criteria puts us into stocks whose outlooks remains healthy and more likely to attain their fair value targets.
• 185 stocks with a price above $10. Yes, often those stocks under $10 are exciting with tremendous upside potential. However, that low price also comes with additional risk. So I believed it was best to them out for now.
• 11 Stocks with 50% or more upside to fair value targets set by Wall Street analysts. And yes, Wall Street target prices are the best universal choice of value metric. That is because different industries have different methods of valuation and just using PE, PEG, Price to Sales, Book Value, Discount Cash Flow or other valuation metrics across all industries will have you missing many attractive opportunities.

AIMT shares were trading at $31.61 per share on Wednesday afternoon, down $0.07 (-0.22%). Year-to-date, AIMT has gained 32.15%, versus a 29.66% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

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