With just over two weeks left in what has been an outstanding year for stock investors, all eyes are turning to next year. However, history tells us that December can often be a strong time for the markets as the proverbial “Santa Claus rally” takes effect. This is a rally that often is basically a bunch of window dressing for portfolio managers to get some of the top stocks into their portfolios for the year-end reconciliation. With most of the profit and loss work out of the way, this is usually buying for show.
A new Jefferies research report focuses on the firm’s new top growth picks, and we found four that may not only be great trades for the balance of 2017, but good stocks to own as we head into the new year. Of course, all are rated Buy at Jefferies.
This company pioneered the artificial heart valve, and it could be poised for big growth. Edwards Lifesciences Corp. (NYSE: EW) provides products and technologies to treat structural heart disease and critically ill patients worldwide. The company offers transcatheter heart valve therapy products, comprising transcatheter aortic heart valves and their delivery systems for the nonsurgical replacement of heart valves.
The company also provides surgical heart valve therapy products, such as pericardial valves for aortic and mitral replacement, and minimally invasive aortic heart valve system, as well as tissue heart valves and repair products, which are used to replace or repair a patient’s diseased or defective heart valve.
Top Wall Street analysts feel that the company’s acquisition of privately held CardiAQ last year made good sense going forward. CardiAQ has human implants of transcatheter mitrial valves, and Edwards is focused on the mitrial valve opportunity after its very strong success in aortic valves.
Jefferies has been positive on the stock for some time and noted this:
The company hosted its annual investor day and we came away more positive on the long term runway for growth for aortic. The transcatheter aortic valve replacement, market outlook for $5 billion by 2021 was maintained but the company provided data around the prevalence of aortic stenosis (AS) at 4.5 million patients, suggesting a total addressable market of nearly $100 billion. Also, at several hospitals surveyed, as few as 25% of confirmed AS patients are recommended for treatment, suggesting there’s much to do to increase utilization
The Jefferies price target for the shares is $136, and the Wall Street consensus target is $130.33. The shares traded early Tuesday at $117.80.
This is a stock that came out with big fanfare and has turned around recently. Square Inc. (NYSE: SQ) develops and provides payment processing, point-of-sale (POS), financial and marketing services worldwide. It provides Square Register, a POS software application for iOS and Android, which enables sellers across a range of business types to itemize products or services for faster checkout; Square Analytics, which shows its sellers how their businesses are performing; Instant Deposit service, which sends funds from a sale immediately to a seller’s bank account; and Square Reader for magnetic stripe cards, EMV chip cards and NFC, which connects wirelessly to mobile devices.
The company also provides Square Capital, a financial service product, which provides merchant cash advances to pre-qualified sellers; Square Customer Engagement, a marketing service product; and Caviar, a food delivery service.
The analysts said this in their coverage:
This week, we hosted an investor meeting with the CFO. Management affirmed MSD margin expansion guidance in 2018 and noted that excess margin would likely be reinvested back in the business. That said, we believe the company could get close to GAAP profitability in 2018. We were walked through a Bitcoin/Square cash beta and came away incrementally positive on the potential consumer appeal of the service.
Jefferies has a $47 price target, which compares with the $38.97 consensus estimate. The shares trade at $39.05 Tuesday morning.