Jefferies Stocks to Buy That Could Jump From an Earnings Surprise
The extreme market volatility of the past few weeks has left some investors very nervous. Ongoing selling of technology (Internet) and biotech shares spilled over into the broad market during the past week, forcing the S&P 500 down more than 2%. The analysts at Jefferies noted a very interesting statistic when it came to the stock market. The U.S. market saw net inflows of $6.5 billion, suggesting that investors are not panicking or fleeing from domestic equities overall. With the long Treasury bond yield dropping to its lowest levels since last summer, investors’ appetite for stocks may be increasing.
In a new research report, Jefferies highlights stocks with a rating of Buy that may exceed earnings estimates when the companies report in the next few weeks. The analysts think there is a good probability these stocks could move up nicely on a surprise.
Advanced Micro Devices Inc. (NYSE: AMD) still is enjoying an ongoing love-hate relationship with Wall Street. While a lack of PC growth is a negative for the company, its specialty chips used in gaming consoles and other devices are well liked and very profitable. It was recently confirmed that soon-to-be released AMD-powered desktops and notebooks will have pre-installed custom BlueStacks Android emulator. This will let customers enjoy the full Android OS experience at no extra charge, and that could be big for the company. The Jefferies price target is set at $5.50. The Thomson/First Call estimate is $4.04. AMD closed Monday at $3.71 a share.
Amazon.com Inc. (NASDAQ: AMZN) is a top stock to buy at Jefferies especially on an oversold basis. Many Wall Street analysts view Amazon as the innovation leader and a top stock to own for 2014 and beyond. In addition to its online retailing muscle, it has a gigantic cloud storage business that continues to dominate rivals. The company will add even more revenue to the top line with the recent increase in Amazon Prime memberships. The Jefferies price target is $450, the consensus estimate is $433.45. Amazon closed on Monday at $315.91.
Bank of America Corp. (NYSE: BAC) has not gotten much love from Wall Street lately. The company is in a much better situation than last year. Earnings are much more consistent, capital has improved and a bigger dividend and share repurchase effort seems very likely. The dividend for investors is a paltry 0.3%. The Jefferies price target is $20. The consensus estimate is $17.56. The stock closed Monday at $16.00.
Boeing Co. (NYSE: BA) shares were up more than 80% last year, and the company recorded better-than-expected orders in the first quarter of 2014, reached favorable agreements with several of its union locals and announced a change in post-retirement plans for non-union workers. Some perceived weak guidance and a 787 glitch that slowed some deliveries have dropped the shares almost 15%, and the analysts think that this provides a solid entry point. Investors are paid a 2.4% dividend. The Jefferies price target is $165. The consensus target is $152.03. Boeing closed Monday at $123.25.
Cubist Pharmaceuticals Inc. (NASDAQ: CBST) has been absolutely hammered since late February, perhaps offering investors an incredible entry point. The company has used acquisitions to bolster its outstanding portfolio of antibiotic drugs over the years, and now it could be a takeover target. The company also has four Phase 3 pipeline products in development, which could boost sales and earnings dramatically. If the Phase 3 trials for CXA-201 prove successful, many Wall Street analysts see a large potential upside from current valuation. The Jefferies price target is $87, and the consensus price objective is $81.31. Cubist closed Monday at $61.66.
Motorola Solutions Inc. (NYSE: MSI) is a leading provider of mission-critical communication solutions and services for enterprise and government customers. The company’s new VX 9000 wireless local area network combines scalability with high-performing advanced wireless services, superior deployment flexibility and centralized management of the entire wireless network through a single windowpane. Investors are paid a 2% dividend. The Jefferies price target for the stock is $75, and the consensus is at $65.06. The stock closed Monday at $63.78.
Sonus Networks Inc. (NASDAQ: SONS) is a longtime favorite at Jefferies. The firm sees the company transitioning into the session border controller and diameter signaling market, two of the most robustly growing markets in the communications equipment space, while it manages the decline of its media controller platform and slowly transitions its product to a more software-focused and potentially less hardware-focused platform. The Jefferies price target is $5, and the consensus is lower at $4.30. Sonus closed Monday at $3.09.
USG Corp. (NYSE: USG) is yet another top name that could beat estimates and really move if the homebuilding sector picks up through the busy spring and summer selling season. USG Worldwide operations serve the commercial, residential and repair and remodel construction markets with wall, ceiling, exterior sheathing, flooring underlayment and roofing systems. The Jefferies price target is $43 and the consensus target is $36.48. USG closed Monday at $30.59.
The market has been negative about first-quarter earnings, but if they start to be better than expected, investors could see a real turnaround in overall market sentiment. With the drastic recent sell-off, there are plenty of good opportunities for those who have been patient and are waiting to put some capital work to work.