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Needham just released its first-ever Conviction List, which is a group of companies assembled by analysts at the firm. It's filled with stock picks those experts predict will outperform the broader market over the next six months.
The selection of companies spans a wide variety of industries, including software, semiconductors, pharmaceuticals, and tech.
"We expect these stocks to outperform the average total return of the broader market as well as the other securities in the analyst's coverage universe over the next 12 months." the report said.
Why: "We believe Apple is transitioning from a company valued based on hardware unit sales into a company based on subscriber and services growth." Laura Martin, an analyst at Needham said. "AAPL's pivot toward maximizing its lifetime value per unique user suggests more consistent revenue growth, expanding margins, and an expanding valuation multiple."
Why: Scott Bert, an analyst at Needham, said Avalara, which provides tax compliance software, will benefit from secular tailwinds and new partnerships opportunities with ecommerce marketplaces.
Why: Collegium is currently trading an attractive valuation for investors to buy into the stock, and the the success of the company's Xtampza drug could help it reach profitability by the end of the year, according to Serge Belanger, an analyst at Needham said.
Why: Ryan MacDonald, an analyst at Needham, picked Coupa Software, which specializes in business spend management software, because he thinks the company can grow more 30% over the next few years.
Why: "CUB continues to add key new contract awards in all three of its operating segments, providing additional visibility into its near-record multi-billion-dollar backlog." Jim Ricchiuti, an analyst at Needham said.
Why: "We are placing Designer Brands on the Needham Conviction List, as we believe the business is poised to improve in 2H19 following lumpiness in 1H19, and is poised for an even better 2020," Rick Patel, an analyst at Needham said.
Why: Chad Messer, an analyst at Needham, said G1 Therapeutics's Trilaciclib, a myelopreservation drug, has a stronger chance of receiving regulatory approval.
Why: "We believe in LK's profitability outlook as cost per item should reduce significantly owing to economics of scale, and the scale-down of promotions." Vincent Shenghao Yu, an analyst at Needham said.
Why: Lumentum, a manufacturer of telecommunications equipment, has the dominant technology in critical telecommunications markets, according to Alex Henderson, an analyst at Needham.
Why: "We believe MRVL represents one of the best semiconductor plays on the global deployment of 5G wireless infrastructure equipment," N. Quinn Bolton, an analyst at Needham said.
Why: "NEWR is a provider of a full stack monitoring solution that allows enterprises to instrument and ensure continuous operability of mission-critical applications, which is becoming more important as enterprises expose more of their organizational facets to digital surfaces," Jack Andrews, an analyst at Needham said.
Why: Alan Carr, an analyst at Needham, said Rhythm is developing a treatment for rare obesity disorders that could be approved and launched by the fourth quarter of 2020.
Why: "We are placing SS&C Technologies Holdings on the Needham Conviction List, given our belief that the company will be able to combine solid organic growth with acquisition synergies from the 2018 acquisitions of DST, Eze Software, and Intralinks to drive outsized EPS growth." Needham Analyst Mayank Tandon said in a research note.
Why: "We continue to think sponsored placements with the Hotel segment, in particular, carries ongoing tailwind potential as a part of Hotel, Media & Platform's return to growth," Brad Erickson, an analyst at Needham said in a research note.
Why: Stephen Unger, an analyst Needham, said he sees potential in for Veracyte to generate long-term revenue growth by commercializing its expanding portfolio of diagnostic tests.
Why: According to Richard Valera, an analyst at Needham, Vonage is well-positioned to capitalize on a shift in the telecommunications market toward an IP/cloud-based paradigm.
Why: "We believe ZS is the first full cloud Security platform based on the core fundamental principles needed to build a better security architecture, sharply reduce breach risk, and ensure consistent security policy and scale," Alex Henderson, an analyst at Needham said.
