With the fourth quarter right around the corner and earnings season ready to rev back up, many investors are shuffling their portfolio for the stretch run of 2017. While it probably makes sense to use caution, as we are in the seasonally risky time of year, most Wall Street analysts and strategists are positive on the outlook for third-quarter earnings.
A new Jefferies research report features a new list of top growth stocks to buy, and the list is dominated by top technology and biotechnology companies. While better suited for more aggressive portfolios, they could hold some serious upside for those with higher risk tolerance.
Advanced Micro Devices
After years of frustrating performance, this company appears to have turned the corner and is a hot commodity on Wall Street, despite a recent earnings hiccup. Advanced Micro Devices Inc. (NYSE: AMD) is one of the largest suppliers of PC microprocessors and graphics processors worldwide to computing original equipment manufacturers. The company’s main product lines include desktop, notebook and graphics processors, and embedded/semi-custom chips.
The analyst feels that AMD, which is releasing the first major offering in five years, the Ryzen chipset, is in his words “uniquely positioned” to compete with the big players like Intel and Nvidia in the $50 billion total addressable market for personal computers, gaming, artificial intelligence and servers.
AMD is only held by less than 5% of active managers, which is way below the historical 10% ownership level at a relatively equal weight position. The Jefferies team has been bullish on the shares for some time and said this in the report:
Last week, CNBC reported that Tesla is working with AMD to refine an artificial intelligence chip for autonomous driving tasks in its cars. We think the unconfirmed partnership would make sense and though we would not expect the shipment of AMD chips to Tesla to have a material impact near-term, we think this would constitute a critical win for AMD and support our thesis that the company is a primary beneficiary of the shift to parallel processing GPUs.
The Jefferies price target on the stock is $19, and the Wall Street consensus target is $14.23. The stock closed Monday’s trading at $12.61 a share.
This high-profile, old-school software company has posted outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.
Top analysts feel there are an additional 11.7 million potential users, driven by growth in the creative community, student and teacher penetration and conversions from the piracy. Market and value expansion provide additional upside. The company posted outstanding second-quarter numbers and the rest of the year looks very solid.
The analysts noted this:
Company reported last week and though revenue and earnings-per-share beat Street expectations, focus was on the lackluster third quarter bookings in Experience Cloud and shares traded slightly lower. We believe the forecasting miss was due to Adobe’s increasing strategic role and success in selling larger deals with lengthening sales cycles.
Jefferies has a $180 price target, which compares with the consensus target of $164.33. The shares closed on Monday at $144.57 apiece.