Value stocks have acted outstanding over the past year, and many people like to stay in the value arena when the market is right at all-time highs. Value stocks have outperformed growth stocks by 8% over the past 12 months, and when that has happened in the past, growth tends to outperform value over the next year. With earnings finally starting to come around some, it makes sense for investors to look to growth ideas.
In a new research report from Jefferies, top-notch equity strategist Steven DeSanctis makes the case that now is the time to rotate to growth stocks from value, and he sees relative valuations still very attractive for the group. We found four stocks in the Jefferies coverage that should benefit from just this kind of stock rotation, and all are rated Buy at Jefferies.
This company has ticked higher since the deal with Baker Hughes fell through due to regulators concerns, but it is still down almost 50% from highs printed two years ago. The Jefferies team added the company to the Franchise Picks portfolio last month. Halliburton Co. (NYSE: HAL) is one of the world’s largest providers of products and services to the energy industry.
The company serves the upstream oil and gas industry throughout the life cycle of the reservoir, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.
The oilfield giant announced last year a $1 billion investment to develop huge potential oil fields in Ecuador and it has entered into a long-time deal with Petroamazonas, an Ecuador-based company involved in the exploration and development of the country’s oil reserves. With oil being absolutely demolished over the last year, this top oil service company is a great stock to buy on sale, as the oil recovery has shown some legs.
Top Wall Street analysts see the end of the Baker Hughes deal as removing uncertainty on the company, and they also think that the company still has acquisition possibilities, which could help expand the business footprint. Strong Permian basin activity also bodes well for the stock.
Halliburton investors are paid a 1.63% dividend. The Jefferies price target for the stock is $56, and the Wall Street consensus target is lower at $46.03. The shares closed most recently at $44.26.
This top chip company has reported strong earnings this year, and the Jefferies team says to own shares in front of this week’s earnings report. NVIDIA Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles.
NVIDIA is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has a technology partnership with electric car maker Tesla Motors. It has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.
Top Wall Street analysts feel the stock is maturing to a platform company from a pure chip company, and they see the stock continuing to benefit from four secular trends: virtual reality, PC gaming, chips in the automobile industry and graphic processing units (GPUs) in the cloud.
NVIDIA investors are paid a 0.8% dividend. Jefferies has a $69 price objective for the stock, and the consensus target is much lower at $49.93. The stock closed Monday at $58.74.