The three companies listed below have been upgrading their operating activities in recent years, as shown by a substantial increase in the allocation of funds to the purchase of fixed assets such as property, plant and equipment. This could mean that the managers of these companies expect a higher demand for the goods and services that they produce, which would ideally correspond to higher revenues.
Wall Street sell-side analysts are also optimistic about these stocks, as they have recommended positive ratings for each of them.
Deciphera Pharmaceuticals Inc
The first company that makes the cut is Deciphera Pharmaceuticals Inc (DCPH, Financial) a Waltham, Massachusetts-based clinical-stage biopharmaceutical company.
Deciphera Pharmaceuticals Inc allocated $5.32 million to the purchase of property, plant and equipment in full-year 2020 compared to $140,000 in 2015. On average, the spending increased by 125.3% per annum over the past five years.
Morningstar analysts estimate that on a year-over-year basis, total sales will increase by 135.5% to $98.90 million this year, by 161.4% to $258.50 million in 2022 and by 87.6% to $485 million in 2023.
The net loss per share of $4.78 that the company posted for full-year 2020 is expected to worsen this year, increasing to $5.07 per share. The net loss should improve over the following three years. Analysts estimate a net loss per share of $3.46 in 2022, another net loss of $1.42 in 2023 but a net profit of $1.23 for full year 2024.
On Wall Street, the stock has a median recommendation rating of buy with an average price target of $65.17 per share.
The stock traded at $32.30 per share at close on Monday for a market capitalization of $1.87 billion. The share price has dropped by nearly 44% over the past year, determining a price-book ratio of 4.20 versus the industry median of 3.79.
Merus NV
The second company that makes the cut is Merus NV (MRUS, Financial), an Utrecht, The Netherlands-based clinical-stage biotechnology developer of specific treatments for several forms of cancer and autoimmune disease.
In 2020, Merus NV allocated funds of $1.287 million to the purchase of property, plant and equipment, compared to $548,700 allocated in 2016. The spending has grown more than 38% on average every year over the past four years.
Morningstar analysts estimate that on a year-over-year basis, total revenue will jump by 68.73% to $50.52 million this year, slightly decline by 3.7% to $48.65 million in 2022, increase again by 60.5% to $78.09 million in 2023 and increase by 66.3% to $129.83 million in 2024.
The company reported a net loss of $2.92 per share in 2020, which analysts expect will be less over the upcoming years. Wall Street is predicting a net loss of $2.05 in 2021, a net loss of $2.34 in 2022, a net loss of $2.34 in 2023 and a net loss of $1.88 in 2024.
On Wall Street, the stock has a median recommendation rating of buy with an average price target of $29.58 per share.
The stock price traded at $30.99 at close on Monday for a market capitalization of $1.19 billion following a 133% increase over that past year. The price-book ratio is 5.44 versus the industry median of 3.79.
Rekor Systems Inc
The third company that makes the cut is Rekor Systems Inc (REKR, Financial), a Columbia, Maryland-based provider of vehicle identification services and artificial intelligence-based management systems solutions in North America and internationally.
Rekor Systems Inc used approximately $1.04 million for the purchase of property, plant and equipment in 2020, growing 26-fold from $4,000 spent in 2016.
Morningstar analysts estimate that total sales will gradually improve over the following years as they are expected to be $20.36 million in 2021 and $44.63 million in 2022.
The net loss of $0.63 per share is also expected to improve in the upcoming years. Analysts project a net loss of $0.49 per share in 2021 and a net loss of $0.18 in 2022.
On Wall Street, the stock holds a median recommendation rating of buy with an average target price of $15.33 per share.
The stock was trading at $11.60 per share at close on Monday for a market capitalization of $505.92 million thanks to an 80.15% increase that happened over the past 12 months. The price-book ratio is 4.97 versus the industry median of 3.66.
Disclosure: I have no positions in any securities mentioned.
