4 Stocks to Buy Set to Beat Current Earnings Estimates

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The third quarter finally came to an end, and investors were glad to see it put in the record books. It will go down as the worst quarter in four years, and it sure felt like it. In a new report, Jefferies finds some good news and notes that since 1950, there have been 15 times when the third quarter has been down 5% or more. Fortunately, the fourth quarter was up 6% on average and was higher 86% of the time.

Jefferies also reports for the third quarter, 76 companies have issued negative earnings guidance, which is the lowest since the second quarter in 2012. Even better, 32 companies have issued positive earnings guidance for the quarter, which is the highest since the fourth quarter in 2012.

The Jefferies team also pinpointed companies and sectors they think could beat current Wall Street estimates for the quarter, the rest of the year and 2016. We highlight four top stocks rated Buy at the firm.

Ametek

Jefferies analysts are ahead of Wall Street estimates for 2016 earnings per share here. Ametek Inc. (NYSE: AME) manufactures electronic instruments and electromechanical devices worldwide. The company’s EIG segment provides advanced instruments for the process, aerospace, power and industrial markets; process and analytical instruments for the oil, gas, petrochemical, pharmaceutical, semiconductor and factory automation markets; and instruments for the laboratory equipment, ultra-precision manufacturing, medical and test and measurement markets.

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Ametek’s EMG segment provides electrical interconnects, precision motion control solutions, specialty metals, thermal management systems and floor care and specialty motors; precision motion control products for data storage, medical devices, business equipment, factory automation and other applications; and engineered electrical connectors and packaging used to protect sensitive electronic devices.

The company posted solid fiscal second-quarter numbers in August, and the abrupt sell-off gives investors a very attractive entry point to a stock that was trading close to 52-weeks highs just six weeks ago.

Ametek investors are paid a small 0.70% dividend. The Jefferies target price for the stock is $71, and the Thomson/First Call consensus target is much lower at $60.70. The shares closed Wednesday at $52.32.

Boeing

This top aerospace industrial has sold off recently and is offering investors a very solid entry point. Boeing Co. (NYSE: BA) has been on a downward trend since late February and now may be ready to perk up. Along with its subsidiaries, Boeing designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.

Jefferies has increased confidence in continuing good demand and notes that the company recently made announcements that support the analyst’s thesis that productivity and margins will continue to improve. 787 execution is good as the company works through the backlog, and cash flow looks to be strong with 787 deliveries and C-17 orders. Some Wall Street analysts also point to low oil prices as a bullish indicator for the top carriers that are Boeing’s big customers.

Boeing investors are paid a solid 2.72% dividend. The Jefferies price target is $185, and the consensus target is $164. The shares closed trading on Wednesday at $130.95.

Team Health

This top health care company could surprise to the upside. Team Health Holdings Inc. (NYSE: TMH) is a leading provider of outsourced physician staffing solutions for hospitals in the United States. Through its 21 regional locations and multiple service lines, TeamHealth’s more than 14,000 affiliated health care professionals provide emergency medicine, hospital medicine, anesthesia, urgent care and pediatric staffing and management services to approximately 1,000 civilian and military hospitals, clinics and physician groups in 47 states.

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The Jefferies team feels that the company’s acquisition of IPC Healthcare is viewed by Wall Street as too expensive. They feel differently and think that the synergies of the combination will really start to show up over the next two years, and it also gives the company a greater exposure to Medicare bundling.

The Jefferies price target is $80, and the consensus target is $74. Shares closed Wednesday at $54.03.

Quintiles

This top contract research company (CRO) has big upside potential for investors. Quintiles Transnational Holdings Inc. (NYSE: Q) is the world’s largest provider of biopharmaceutical development and commercial outsourcing services, conducting business in approximately 100 countries. It has helped to develop or commercialize all the top 75 best-selling drugs on the market. Quintiles applies extensive therapeutic, scientific and analytics expertise to help customers navigate an increasingly complex health care environment

Quintiles launched this year its Asia-Pacific solution, which gives emerging companies access to Quintiles’ data-driven insights, its knowledge of local markets, its in-depth therapeutic and scientific expertise and its global drug development platform. It further adds to Quintiles’ solutions for emerging companies, which includes Novella Clinical, a specialty CRO focused on the needs of small to mid-sized oncology companies and medical device and diagnostic companies. With R&D budgets jumping and drug companies looking to turn pipeline into products and sales, the company is poised for a very strong second half of 2015.

The Jefferies price target is $87.50. The consensus target is $87.70. Shares closed on Wednesday at $69.57.

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All these Jefferies stocks with upside potential have taken a hit during the recent market turbulence. They are now offering investors outstanding price entry points. These stocks are more appropriate for growth accounts with a higher risk profile.