More and more, the companies that we cover on Wall Street are starting to agree that while the future’s very bright for the U.S. economy, it also may be one of stock market gains that are much lower than has been the case over the past nine years. When that is the scenario, investing strategies often shift from indexing to a more disciplined stock-picking routine, and that’s when investors need solid growth ideas.
Jefferies highlights its top growth stocks to buy each week, and this week is no exception. While these companies are better suited for accounts that have a higher risk tolerance, they all make good sense now and have outstanding upside potential. These five look extremely good now.
This remains a top pick on Wall Street and Jefferies remains very positive on it. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. It develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers.
The company reported outstanding results that beat estimates and the analysts commented:
Activision reported results, beating forecasts and guiding 2018 conservatively. Since 2011, the company has ended the year 19% higher than the initial outlook, on average, which suggests $3.00 in earnings per share could be achievable. We note that the beat this quarter was driven by a resurgence on Call of Duty as well as in game spend. We raised estimates and note that our new $3.02 estimate for 2019 is ahead of consensus.
Jefferies also feels that microtransactions may be one of the most compelling reasons to own the shares now. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. Another term, “pay-to-win,” is sometimes used to refer to games where buying items in-game can give a player advantage over others, particularly if the items cannot be obtained by free means.
Shareholders receive just a 0.51% dividend. The Jefferies price target for the shares is $86, and the Wall Street consensus target is $74.04. The stock closed Monday at $76.86.
Jefferies notes that, despite a big run, the stock is cheap compared to competitors. Match Group Inc. (NASDAQ: MTCH) is the worldwide leader in online dating products in terms of revenue, monthly active users and paid members. Its portfolio of dating sites includes several of the most popular, including Match, Meetic, OKCupid, Tinder, POF and Twoo. It has four of the top five highest-grossing dating apps in North America and three of the top five worldwide.
With ever more millennials turning to online dating, the prospects for this company are incredibly strong. Toss in the computer literacy of younger Americans, and it makes sense that the stocks in this area would show robust growth. Some top analysts on Wall Street feel that as much as a stunning 50% of all dates will begin online by 2022.
The analysts said this:
The company continues to trade at a discount to the subscription Internet peer group and has only 7 million paid subs relative to what we view as a total addressable market of 500 million global singles. We raised EBITDA numbers modestly, expect a 16% 3 year forward revenue compound annual growth rate and believe that catalysts include a new Tinder monetization feature and strategic M&A.
Jefferies has a $50 price target, and the consensus target is $40.35. The stock closed on Monday at $45.60.