Increasingly, the brokerage firms and banks that we cover on Wall Street are starting to agree that while the future remains bright for the U.S. economy, the future for investors may be one of stock market gains that are much lower than the norm has been over the past 10 years. When that is the case, investing strategies often shift from indexing to a more disciplined stock picking routine, and that’s when investors need solid growth ideas.
Jefferies highlights the firm’s top growth stocks to buy each week, and this week is no exception. While these stocks are better suited for accounts that have a higher risk tolerance, they all make good sense now and all have outstanding upside potential. We found four that look extremely good now and could bring investors some outsized year-end gains and continued upside in 2019.
This is a top health care play that probably holds less risk for investors. Anthem Inc. (NYSE: ANTM) is one of the largest managed care organizations in the United States, with offerings in the commercial (large and small employer), Medicare, Medicaid and individual markets. The company operates Blue Cross & Blue Shield plans in 14 states.
The company got a string of positive Wall Street updates last week, with many firms raising their price targets for the stock. The Jefferies team did as well and said this in the report:
We met with management and came away more positive on the company’s long-term outlook. We note that management’s target for long-term earnings-per-share(EPS) growth in the high single digits, low double digit range seems achievable without the help from pharmacy benefit managers (PBM) savings, which we believe will add 6-7% to EPS in 2020-2021. We think EPS growth will largely be driven by an improved medical/pharmacy cost position driving enrollment growth and reinvestment of the $3.2 billion of pharmacy cost. We estimate a 2021 EPS power of $23.50+. inclusive of PBM savings, yielding an EPS compound annual growth rate from 2018 to 2021 of 15%.
The Jefferies price target recently jumped to $345 from $323, and the Wall Street consensus target was last seen at $321.79. The stock closed last Friday at $280.53 a share after falling almost 2.5% on the day.
This top stock has backed up nicely and is offering a very good entry point. Sensata Technologies Holding N.V. (NYSE: ST) is one of the world’s leading suppliers of sensing, electrical protection, control and power management solutions with operations and business centers in 16 countries.
Sensata makes products that improve safety, efficiency and comfort for millions of people every day in automotive, appliance, aircraft, industrial, military, heavy vehicle, heating, air-conditioning and ventilation, data, telecommunications, recreational vehicle and marine applications.
The company has two business segments. Performance Sensing manufactures automotive, commercial and industrial sensors, including pressure sensors, pressure switches, position and force sensors. Sensing Solutions manufactures bimetal electromechanical controls, thermal and magnetic-hydraulic circuit breakers, power inverters and interconnection products for the industrial, commercial, aerospace, military and residential end-mark.
The Jefferies team said this about the company when the firm initiated coverage last week:
We like sensors as a play on all three auto tech trends and see limited disinter-mediation as sensors are unlikely to be combined with back end software. Sensata is set for rapid China growth as they modernize the fleet.
Jefferies has set its price target at $59, while the posted consensus target is $54.39. The stock closed trading at $44.23 a share, down 3.5% on Friday.