Jefferies Makes Huge Energy Addition to Franchise Picks Stocks List

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Alphabet

The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) provides online advertising services in the United States, the United Kingdom and rest of the world. It offers performance and brand advertising services, and it operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.

The Google segment also sells hardware products, comprising Chromecast, Chromebooks and Nexus. The Other Bets segment includes businesses such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives.

Top Wall Street analysts point out the company reported better than expected second-quarter results with the best top-line growth since the third quarter of 2014. Paid clicks came in above Wall Street estimates, growing 29%, while Google websites paid click growth was 37% with YouTube and mobile accounting for much of this strength. EBIT margins also continued to see outstanding growth at 39%, versus less than 38% in the same period last year.

The $1,000 Jefferies price target is above the consensus target of $939.50. The shares closed Friday at $804.60.

NXP Semiconductors

This company is considered a top play for investors looking for a chip stock with Internet of Things exposure and is a potential acquisition candidate. The NXP Semiconductors N.V. (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analysts believe the merger is transforming the company into a powerhouse. It made NXP the fourth largest semiconductor company in the industry.

It is also important to note that the combined company has become the number one supplier in auto semiconductors, number one supplier in global microcontrollers, as well as a dominant supplier in mobile payments.

NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers. With a diversified product base, the stock remains a solid buy, albeit a touch pricey compared to others.

The Jefferies price target is $130, and the consensus estimate is $110.30. The stock closed Friday at $101.40.

NVIDIA

This is a top chip stock that has reported strong earnings this year, and posted through the roof second-quarter numbers last month. 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 Jefferies sees the stock continuing to benefit from four secular trends: VR, PC gaming, chips in the automobile industry and graphic processing units in the cloud.

The Jefferies price objective is posted at $73, and the consensus is set at $64.85. The shares closed Friday at $65.99.

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A top new addition to the Franchise Picks portfolio and four of the technology stocks that Jefferies views as its top high conviction picks. All these companies make good sense for aggressive long-term stock portfolios.