The more expensive the market gets, the more long-time investors go back to the strategies that have served them well in the past. One of those strategies is to migrate to value-oriented growth companies when it appears that momentum trading could be wearing out. Given the near 20% run in the S&P 500 last year, and a big start to 2018, it may be a good time to consider some portfolio moves.
In new research report. Steve De Sanctis, the outstanding Small/Mid strategist at Jefferies, stays with his top themes and continues to screen for companies that hit four important metrics: 5% or more sales growth, debt to equity of less than 50%, trailing return on equity above 0% and greater than 20% foreign sales exposure.
Some 15 companies made the grade, and we found five of the larger cap companies that look like outstanding plays as we move farther into fourth-quarter earnings reporting. All are rated Buy at Jefferies.
This stock has been on fire over the past year and a recent pullback could be offering investors a great entry point. Align Technology Inc. (NASDAQ: ALGN) designs, manufactures and markets a system of clear aligner therapy, intra-oral scanners and computer-aided design and computer-aided manufacturing (CAD/CAM) digital services for use in dentistry, orthodontics and dental records storage in the United States and internationally.
The company’s Clear Aligner segment offers Invisalign Full, a treatment used for a range of malocclusion. Its Invisalign Teen treatment addresses orthodontic needs of teenage patients, such as compliance indicators, compensation for tooth eruption and six free single arch replacement aligners. And its Invisalign Assist treatment is for anterior alignment and aesthetically-oriented cases.
Align’s chief financial officer, John Morici, recently spoke to ongoing traction in China, Japan and EMEA, while certain Greenfield markets (India and Brazil) should play a bigger role in coming years. Furthermore, Morici highlighted that Align’s global supply chain effort is just underway, which should further aid international growth in coming years.
The Jefferies price target for the stock is $280, and the Wall Street consensus price objective is $273.73. The shares closed trading on Friday at $269.46.
This company has been very up and down over the past 52 weeks, and it has frequently been the subject of takeover rumors. Ciena Corp. (NASDAQ: CIEN) is a vendor for high-capacity optical transport and Ethernet switching equipment to carriers, enterprises, cable operators and governments. It specializes in transitioning legacy communications networks to converged, next-generation architectures capable of efficiently delivering a broader mix of high bandwidth services.
The company’s Converged Packet Optical segment offers networking solutions optimized for the convergence of coherent optical transport, Optical Transport Network (OTN) switching and packet switching. Its products comprise the 6500 Packet-Optical Platform, 5430 Reconfigurable Switching System, CoreDirector Multiservice Optical Switches and OTN configuration for the 5410 Reconfigurable Switching System.
Ciena remains a top pick due to an expected multiyear ramp in 100G optical spending, which should continue to accelerate in 2018. The analysts noted this in a report last year:
We see multiple tailwinds helping to drive strong sales growth and the stock remains a top pick for 2018. We believe Verizon’s metro 100G buildout will be a focus for 2018 and the company could see catch-up spend from the now combined Centurylink. In addition, the new Waveserver products should likely continue to ramp as additional customers are added. We think managements guidance for 5% revenue growth in 2018 is likely conservative.
Jefferies has a $30 price target, while the posted consensus target is $26.96. Shares closed trading on Friday at $21.85.