Breakout Momentum Plays You Need to Know About

Key Points

• Three companies with momentum potential include two biotech firms—uniQure and Omeros—and a maker of battery-grade lithium products, Stardust Power.
• uniQure and Omeros have seen significant product developments, either in the form of promising results or through licensing agreements.
• Stardust is expanding its supply of lithium carbonate and is poised to ramp up production at a time when federal regulations are an important tailwind for the industry.

Momentum investors rely on a combination of astute analysis and timing to maximize gains. While this approach can carry a fair degree of risk, the allure of identifying a fast-growing stock and joining a rally that has room to continue is powerful.

The strong potential for explosive growth that characterizes the biopharmaceuticals industry makes it a primary target for many momentum investors, and two companies in that space have recently achieved significant gains. The first, uniQure N.V. NASDAQ: QURE, saw a major share price leap in late September and has worked to continue those gains in the following month. The other, Omeros Corp. NASDAQ: OMER, experienced a jump in price in mid-October.

For investors seeking diversification outside of the biotech space, Stardust Power Inc. NASDAQ: SDST is a micro-cap battery tech firm and a penny stock that has yet to begin a rally, but which enjoys astronomical upside potential based on estimates from bullish analysts.

Large Pipeline and Promising Results Fuel uniQure

Known for its adeno-associated viral (AAV) vector platform used to design gene therapies for diseases including hemophilia, uniQure reported encouraging results for an initial safety and exploratory efficacy trial related to its AMT-191 candidate in September. The company also has a number of other drug candidates that have shown promise: its AMT-130 achieved a critical breakthrough therapy designation earlier this year and has demonstrated strong results among patients with Huntington's disease, while AMT-260 showed significant reduction of seizures in patients with a unique type of epilepsy.

With a biotech firm that is pre-profit, as is the case for uniQure, maintaining a healthy pool of cash to sustain operations through essential development and trial phases is key. As of the end of the second quarter, the company had $377 million in cash and investments, providing a runway into 2027 and extending beyond AMT-130's projected launch period.

QURE shares have traded horizontally since spiking in September, but analysts remain bullish. Ten out of 12 rate the stock a Buy, and collectively they expect a consensus price target of $71.75, for 15% in upside potential.

Major Novo Nordisk Deal Launches Opportunities for Omeros

Omeros develops small-molecule and protein therapeutics for conditions related to the central nervous system. One of its most promising drugs, Zaltenibart, has the potential to address multiple blood and kidney disorders.

In mid-October, shares of the company spiked when it announced that Danish multinational pharmaceutical giant Novo Nordisk A/S NYSE: NVO had acquired licensing rights to Zaltenibart for $240 million in upfront payments and the potential for additional royalties.

While this is massive news for Omeros, there may still be room to rally further. As the company now has a runway into 2027, it has additional time to pursue FDA approval for another of its top candidates, Narsoplimab.

Despite jumping from just over $4 per share to nearly $11 per share upon the Novo Nordisk news, OMER shares have fallen back to around $8 per share after the spike. Nonetheless, analysts are optimistic, with five out of eight calling OMER a Buy. They see upside potential of nearly 244%, which would bring OMER stock to more than $27 per share.

Key Agreements and Regulatory Tailwinds Could Mean 1,000% Upside for Stardust

Pre-profit biopharma firms are a risky play, but Stardust may be even more so. Just three years old and pre-revenue, this $40-million lithium battery product provider is down more than 87% this year. However, the company may be poised for growth thanks to recent agreements with Oklahoma Gas and Electric Company—the subsidiary of OGE Energy Corp. NYSE: OGE—to develop an electric substation and with Prairie Lithium to secure 6,000 metric tons of lithium carbonate per year.

With these developments, Stardust will be closer to scaling its production at a time in which domestic demand is surging and international trade tensions are constraining the North American lithium supply.

Further, federal initiatives have helped to bolster domestic lithium producers, providing further tailwinds for companies like Stardust. This has encouraged analysts to take a boldly bullish view of SDST shares. Four out of six call SDST a Buy, and the company's price target of $51.13 is, astonishingly, almost 1,000% above where it currently trades.