Increasingly, the Wall Street firms we cover are starting to agree that while the future is still 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 its 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 have outstanding upside potential. We found four that look extremely good now.
This remains a top video gaming pick on Wall Street and Jefferies is still very positive on the shares. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. The company develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers.
Shares of the gaming giant have been volatile and are down a stunning 45% from highs posted last fall. Some recent positive announcements could be meaningful for the stock to regain traction. The analysts said this:
The company announced that Call of Duty’s (CoD) Battle Royale mode, Blackout, will be free in April and released new content. We believe Activision Blizzard is testing the free to play model with its crown jewel franchise and think that we could see a more permanent conversion. Spiketrap data shows that these announcements pushed CoD net online sentiment score to levels not seen since its launch in Oct. We expect that a permanently free Blackout mode would allow CoD to better compete with games like Fortnite and would more than offset pressure on the $60 game business.
The shareholders receive a 0.79% dividend. Jefferies price target for the stock is $60, while the Wall Street consensus target is $52.70. The stock was last seen trading at $47.01 a share.
This is the absolute leader in online retail, and recently it opened its first brick-and-mortar store in New York City. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Consistent with data from 2018, digital marketing users overwhelmingly cited Amazon as the fastest-growing channel for advertising budgets. Many retailers also are leveraging their Amazon advertising data to retarget users on other channels (namely Facebook) to drive traffic and sales to their own websites (bypassing Amazon marketplace or FBA fees).
Jefferies sees more upside to shares over the coming years and explained why:
Longer term, we see a road map to $3,000 for AMZN, supported by our sum-of-the-parts work. The SOTP analysis even includes what we believe to be conservative estimates around growth (expect retail to continue to decelerate) and multiples. AWS, advertising and 3P are all expected to grow faster than the retail business, are accretive to margins and are higher multiple businesses. Additionally, new businesses including healthcare, where we expect them to play in Rx, would be generally incremental to our forecasted growth
Jefferies has a whopping $2,400 target price, and the consensus target is $2,073.55 The shares closed most recently at $1,835.34.