With the stock market bouncing back and forth, and anxious investors looking forward to third-quarter earnings reports, now may be the ideal time to make some end-of-the-quarter changes in portfolios. In a new report, Jefferies has dug down deep on some top growth stocks to buy now.
The Jefferies growth stock calls this week are an eclectic group of well-known companies that have big potential for aggressive accounts. With the market possibly starting to wear out the month-long selling binge, these may even be more attractive now.
This is a more off-the-radar pick that the Jefferies team thinks has big upside potential. A.O. Smith Corp. (NYSE: AOS) is a global leader applying innovative technology and energy-efficient solutions to products manufactured and marketed worldwide. The company is one of the world’s leading manufacturers of residential and commercial water heating equipment, as well as a manufacturer of water treatment products.
The company posted outstanding second-quarter numbers in July and raised full year earnings per share guidance 10%. It has been eyeing thriving economies like China and India to spread its footprint. In fact, the company’s business in China has grown significantly over the decade and produced a 28% compounded annual growth rate in sales from 2003 to 2014 with over 7,500 outlets in the nation.
Jefferies met with the CEO last week, and despite concern about the economy there, historically sales by the company in China have not been affected by swings in the stock market, which has been volatile of late.
AO Smith investors are paid a 1.1% dividend. The Jefferies price target is $90, and the Thomson/First Call consensus target is $78.80. Shares closed Monday at $69.01.
Hologic Inc. (NASDAQ: HOLX) is a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products. Its core business units focus on diagnostics, breast health, gynecological surgical and skeletal health. With a unified suite of technologies and a robust research and development program, Hologic is dedicated to what it calls the “Science of Sure.”
Jefferies has highlighted the changed culture over the past year, with progress seen in the resurgence in the company’s underperforming segments. The 3D cycle is just underway, and the management team believes it will play out over the next three years, its share going from 14% now to 60%, with good data backing up 3D testing. The analyst also thinks the operating margins can lift from 32% last year to 35% in three years and revenue growth will be 8% in 2016.
The Jefferies price target is $48, and the consensus target is $41.64. Shares closed Friday at $41.76.