In the context of the optimistic scenarios prevailing over the pessimistic ones for at least 2026, what sexy or big upside stocks are worth considering? Here are seven, but they come with risk.
Last week I looked at going defensive. This week I want to go on the attack on the basis that there’s still another leg up for stocks that will be driven by the optimistic market drivers of lower US interest rates, AI, no recession, lower Trump taxes and less regulation, as well as whether Trumps tariffs will be given the green light from the Supreme Court.
If this doesn’t happen, the market will sell-off as those companies that were expected to gain from tariffs get dumped. Those who were set to lose because of tariffs would then be bought. Athough this would raise concerns about what happens to US debt and deficits, it would be a buying opportunity. That US debt is a potential crisis down the track.
In the context of the optimistic scenarios prevailing over the pessimistic ones for at least 2026, what sexy or big upside stocks are worth considering?
Seven spring to mind and three of those look very easy to recommend. Then there are four speculators that the analysts like and one steady, reliable business that has been beaten up by the market, that looks very buyable.
Let’s kick off with the easy ones to sell to anyone keen about buying good companies with temporary concerns but that look attractive for the patient wealth builder.
- Let’s kick off with Xero (XRO)
The first is Xero that’s now $162.18. The consensus view of analysts is $213.16, a 31.4% predicted upside. Six out of six love the company, with Morgan Stanley seeing a 44% gain ahead.
XRO +31.4%
While I could give you their learned views, the numbers speak for themselves.
- Next up is NextDC (NXT)
While NextDC has gone for a bit of a bounce back lately, according to the people who closely study the company, there seems to be a 16.1% lift left.
NXT +16.1%
Macquarie is the biggest fan. FNArena reports that it thinks that “NextDC’s FY25 update highlights strong demand underpinned by a 4GW pipeline and faster contract conversions, according to Macquarie. Partnerships and build-to-suit AI assets are expected to lower capital intensity, support mid-teens returns and reduce capex requirements by up to -$14.6bn over time, explains the broker.”
It’s a big plus for holding or even buying NXT.
- Third sexy stock is WiseTech (WTC),
Significantly, WiseTech (WTC) (whose founder has had relationship issues that has affected investors’ views on the company’s governance) is a very good business. Seven out of seven analysts agree with me.
WTC +30.6%
After looking at the pros and cons that left out some of the governance concerns, FNArena reported: “UBS maintains a Buy rating, as the larger opportunity is still intact, just taking a little longer to realise. Target falls to $130 from $145.”
Now for something a little different
Now for the “no guts, no glory” sexy stocks. These are in the biomed space and have to deal with the Federal Drug Administration in the US, which makes them riskier plays. But the analysts see big potential.
- First “no guts, no glory” is Telix Pharmaceuticals (TLX)
The table below says it all, with the consensus pointing to 106% upside!
TLX 106.0%
Looking at the above table, you have to ask what UBS is seeing! This is it: “Telix Pharmaceuticals retains a Buy rating with UBS keeping its 12-month price target at $36.00 after the FDA issued a Complete Response Letter for Zircaix citing CMC issue; extra comparability data and remediation at third-party manufacturing sites. UBS views the setback as a speed bump, expecting re-submission within 1 year and potential approval in 1–1.5 years, with site issues likely fixable in 6–8 months and no efficacy concerns raised.”
If you ‘punt’ on TLX, you will have the team at UBS well and truly on your side!
- Loved by insiders
Sticking with biomed risk-taking investing, Neuren Pharmaceuticals is loved by insiders, as its share price action shows.
NEUREN PHARMACEUTICALS (NEU)
Despite its elevated share price, the analysts are still true believers, with Ord Minnett really committed.
NEU +28.2%
Behind their support is this: “Sales of Neuren Pharmaceuticals’ Daybue via Acadia in the US rose 14% year-on-year in the June quarter, with 12% rise from new patients and 2% from pricing. This was ahead of consensus and Ord Minnett’s forecasts. The company reiterated guidance for US$380-405m sales in FY25 and flagged it will review this later in the year, while noting the outlook is robust.”
I must admit I like these companies better when they’re sold off, as you can cash in on short-term negativity, but NEU is certainly highly regarded player in the pharmaceutical space.
Let’s talk about two less seductive stocks
To calm it down a little and I shopped around for good companies under pressure at the moment. Here they are.
- Woolworths could wow you
I’d look at Woolworths (WOW) that has been suffering since its former CEO had a few brain explosions. But this has created a buying opportunity, as the table below shows.
WOW +8%
I think 8% is on the low ball side and I feel Woolies could wow us.
- Upside looking pretty good
The final stock worth considering is SiteMinder (SDR). Numerous analysts see pretty nice upside as the table below shows.
SDR 12.4%
I liked Macquarie’s observations on SDR: “SiteMinder reported an inline FY25 result with 19% growth in revenue on the prior year, which met analyst expectations but was viewed as robust against the market’s lower confidence. Underlying earnings (EBITDA) grew noticeably to $14m versus $1m in FY24. Positive free cash flow was a first for the company, and annual recurring revenue of $273m was considered a standout and has de-risked FY26 expectations of circa $282m. Scope for further acceleration exists with the Smart Platform ramp-up.”
Lower interest rates will help the hospitality and tourism sector, so the macro winds should be good for SDR that seems internally looking cashflow fit.
