More and more, the companies that we cover on Wall Street are starting to agree that while the future is still bright for the U.S. economy, the future may be one of growth that is much lower than the norm. When that is the case, then investing strategies often shift from indexing to a more disciplined stock-picking routine, and that’s when investors need solid growth ideas.
Jefferies highlights the firm’s top growth stocks to buy each week, and this week is no exception. While these companies are better suited for accounts that have a higher risk tolerance, they all make good sense now, and all have outstanding upside potential.
We found four that look extremely good now.
Affiliated Managers Group
This company reported outstanding first-quarter earnings and the rest of the year looks solid as well. Affiliated Managers Group Inc. (NYSE: AMG) is a global asset management company that invests in boutique investment management firms called “affiliates.” The performance of these affiliates drives the company’s own performance, and AMG acts as a fund of funds for these entities.
The company also assists its affiliates in strategic matters, marketing, distribution, product development and operations. AMG holds equity stake in its affiliates along with the independent management, which is responsible for deployment of the funds and generating returns. The affiliates are identified based on their growth potential, with products focusing on global equities, emerging market equities and alternatives. AMG manages three distribution channels through its affiliates.
With just over 10% fixed income exposure, the company is one of the least exposed in terms of assets under management and the most levered to equity. That is fine in a potential rising interest rate environment, but it has proven a touch more volatile in the recent market sell-offs.
The Jefferies price target for the stock is $197. The Thomson/First Call consensus target is higher at $207.38. The stock closed on Monday at $164.89 per share.
This stock has been absolutely mauled and is down a whopping 50% or so since late September. Adeptus Health Inc. (NYSE: ADPT) is a leading patient-centered health care organization expanding access to the highest quality emergency medical care through its network of freestanding emergency rooms and partnerships with premier health care providers.
In Texas, Adeptus Health owns and operates First Choice Emergency Room, the nation’s largest and oldest network of independent freestanding emergency rooms. In Colorado, in partnership with University of Colorado Health, Adeptus Health operates UCHealth Emergency Rooms. In Arizona, with Dignity Health, the company owns and operates Dignity Health Arizona General Hospital and freestanding emergency rooms.
Jefferies notes that the company recently announced a partnership with Texas Health Resources, which the firm feels reduces the company’s risk profile, since 50% of the company’s freestanding ERs are now partnered with nonprofit health systems, driving volumes and shielding them from some rate pressure. Jefferies also sees the potential for 25% unit growth per year possibilities as they achieve more volume into existing facilities. Trading at just eight times 2017 EBITDA, the stock looks cheap as well.
Jefferies has a gigantic $125 price target, while the consensus target is at $93.75. The stock closed most recently at $69.34.