Investing

Jefferies Top Growth Stocks to Buy All Have Big-Time Catalysts

Lee Jackson

Oracle

This top software stock had a very difficult 2018, but it blew out numbers last week. Oracle Corp. (NYSE: ORCL) develops, manufactures, markets, sells, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services worldwide. It also is one of the most valuable brands in the world.

The company licenses its Oracle Database software to customers, which is designed to enable reliable and secure storage, retrieval and manipulation of various forms of data. Its Oracle Fusion Middleware software aims to build, deploy, secure, access and integrate business applications, as well as automate their business processes.

The analysts noted this after Oracle posted massive fiscal fourth-quarter results:

Oracle reported results this week, beating consensus expectations on the back of accelerating infrastructure software revs. We highlight that the infrastructure segment grew at 7%, the highest growth it has seen in 4 ears. We believe that the company could be seeing the early signs of a multi-year product cycle, driven by 12c R2, which is now available across Cloud and on premise environments. We expect the 12c R2 product cycle to help drive mid-single digit revenue growth and double-digit cash flow growth for years. We raised our revenue and EPS estimates through fiscal 2021 and remain ahead of consensus.

Shareholders of Oracle receive a 1.69% dividend. The $66 Jefferies price objective compares with the much lower $53.41 posted consensus price target. The stock ended trading at $56.74 on Monday.

Tesla

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 mass-market-oriented Model 3. It makes some of America’s most eco-friendly cars.

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 are still positive and noted this:

We visited the Fremont facility this week and met with management. We believe that concerns around demand are overblown, while industrial efficiency is improving. That said, we take down our fiscal year auto margin estimates lower due to Model S/X pricing and slightly lower units. While we expect financial performance will be volatile over the near-term, we continue to see significant value in Tesla’s technology and focus on increasingly affordable price points.

The Jefferies price target remains at $300. The analysts’ consensus target is $280.31, and the stock closed most recently at $223.64 a share.

These four stocks all offer investors strength in their specific industries and the ability to generate some significant portfolio alpha. They are suitable for growth accounts with a larger degree of risk tolerance.