Jefferies Out With Top Growth Stock Ideas With Big Implied Upside
More and more, the companies that we cover on Wall Street are starting to agree that while the future is still reasonably bright for the U.S. economy, it 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, then 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.
The rage for energy drinks won’t be ending any time soon and this company is a leader. With more than $3 billion in sales, Monster Beverage Corp. (NASDAQ: MNST) is an alternate beverage company focusing primarily on the energy drink segment. Approximately 75% of sales are in the United States, and the company has two primary operating segments focused on finished goods and concentrates.
It’s important to remember though that Coca-Cola owns 16.7% of Monster Beverage, and the purchase back in 2015 made the Coke the company’s primary distributor in the United States and gave Monster access to the soft drinks giant’s distribution system in international markets. There always remains a possibility Coke could acquire the entire company as well.
The stock has had some issues lately, and the analysts noted this:
We lowered Fiscal 2019-2021 earnings per share and are now slightly below consensus on much discussed US risk factors (Red Bull pricing, traction for Bang, etc.). Coke energy is expected to launch this Spring and our new survey suggests almost 30% would be likely to try the product. Also, satisfaction with Bang (a competitor to Monster) is high and people are two times as likely to view it as healthier.
The Jefferies price target for the shares is $65, though the Wall Street consensus target price is actually higher at $67.63. The stock closed trading on Monday at $53.28 per share.
This has been one of the most talked about companies over the past two years, and the Jefferies team remains very positive on the shares. Tesla Inc. (NASDAQ: TSLA) manufactures and sells electric vehicles, particularly its high-end Model S and X, as well as the forthcoming mass-market-oriented Model 3.
Tesla also generates revenue from selling zero-emission vehicle credits to original equipment manufacturers, installing, operating and selling solar energy systems (previously SolarCity), and manufacturing and selling energy storage systems to customers.
The stock has been volatile, and CEO Elon Musk is unpredictable as well. However, the analysts remain positive and noted this:
While Tesla continues to lead towards increasingly affordable BEVs, it is too early in our view to gauge demand elasticity as pay-back from the end of federal credits is digested. We forecast near break-even in the first quarter with an EBIT loss of $50 million and free cash outflow in the $350-400 million range. That said, given Musk’s track record on guidance we see risk to the upside and believe negativity heading into the quarter is overdone. We forecast 52,000 M3 deliveries in the quarter.
The Jefferies price target remains at $450, well above the $328.32 consensus estimate of analysts. The shares ended Monday’s trading at $289.18 apiece.