Data centre operator Nextdc Ltd (ASX: NXT) may be bringing some Christmas cheer to investors as there are reasons to think the stock could perform well heading into 2018, if not beyond.
You shouldn't be put off by the fact that its share price is already up around 65% this calendar year to $5.96 when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) has gained 5%, as I think there's a bit more in the tank to fuel a price rise to comfortably over the $6 mark.
For one, directors have been buying the stock recently and don't seem to be put off by the high price. Director buying is usually a bullish sign as history has shown this to be a relatively dependable indicator of when you should buy the stock.
In an ASX release this morning, non-executive director (NED) Sharon Warburton has declared that she has spent $178,480 to buy 30,000 shares in NEXTDC. That suggests she bough the stock at around $5.90 a pop.
This follows buying by another NED, Gregory Clark, who bought $77,848 worth of shares on-market for his super fund at the end of October this year when the stock was trading a little over $5 a piece.
If these deals weren't enough to make you feel upbeat about NEXTDC's prospects, Morgan Stanley just issued a tactical note predicting that the stock will rise in absolute terms over the next 30 days.
"We expect the stock to trade higher on a greater appreciation of the long-term opportunity of the second-generation data centres," said the broker.
"We estimate that there is about a 70% to 80% (or "very likely") probability for the scenario"
Morgan Stanley has an "overweight" recommendation on the stock with a price target of $6.50 on NEXTDC.
Management provided a bullish update at its annual general meeting last week. It noted the company had a strong start to the current financial year and has issued guidance for FY18.
Revenue is expected to jump 18%-25% to a range of $146 million to $154 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) will improve between 14% and 25%, implying a figure of $56 million to $61 million.
But NEXTDC isn't the only high growth stock to keep your eyes on. The experts at the Motley Fool have uncovered three others that are well placed to outperform in 2018. Click on the link below to get your hands on the free report to find out what these stocks are.
