More and more, the companies that we cover on Wall Street are starting to agree that while the future’s 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 much better suited for accounts that have a higher risk tolerance, they all make good sense now, as they all have outstanding upside potential and are among the Jefferies top U.S. growth calls for this week.
AMD
This top company appears to have turned the corner, and it had some solid news this week. Advanced Micro Devices Inc. (NYSE: AMD) is one of the largest suppliers of PC microprocessors and graphics processors worldwide to computing original equipment manufacturers. The company’s main product lines include desktop, notebook and graphics processors, and embedded/semi-custom chips.
Last year the company released its first major offering in five years, the Ryzen chipset, which many feel is uniquely positioned to compete with the big players like Intel and Nvidia in the $50 billion total addressable market for personal computers, gaming, artificial intelligence and servers.
Shares rose in the spring on the back of Google’s announcement concerning Stadia at this year’s game developers conference. The AMD CEO had noted that Google’s cloud gaming platform was using AMD Radeon GPUs, and the close partnership now has expanded with Google, as the search giant is using the AMD 2nd Gen Epyc processors in its data centers.
Jefferies has a $38 price target for the shares, while the Wall Street consensus target is lower at $33.18. The stock closed Wednesday at $31.85 a share.
Match
Jefferies continues to love this company, and its shares have really backed up. 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 products such as 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 young 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 Jefferies report noted this:
The hares have pulled back ~23% from post-second quarter highs and while the IAC distribution is likely to remain a near-term headwind; we think it could be a positive for shares long-term. Our latest Tinder data checks (Apple App store ranking and Android downloads) remain positive and supportive of the company’s commentary for 400,000+ sequential subscriber adds in the third quarter. Facebook recently rolled out its dating product in the US, though our survey conducted earlier this year suggests that most users do not wish to commingle dating with social media. We reiterate our Buy-rating on and believe the company can continue to post double-digit revenue growth.
The massive $105 Jefferies price target compares with the $58.12 consensus target. The stock closed at $54.31 per share on Friday.
Revolve
This company had a hot initial public offering back in the spring, but that has cooled off and is offering a great entry point. Revolve Group Inc. (NYSE: RVLV) is an e-commerce fashion retailer focused on Millennial and Generation Z consumers. The company mainly markets and sells women’s designer apparel, footwear, accessories and beauty styles through two differentiated segments: Revolve and Forward. The company generates high relative average order values compared with peers, with close to 80% of its total net sales in the United States.
With the targeted demographics very used to shopping on the internet, the future looks very bright, and Jefferies said this in the research report:
We analyzed web traffic and social media data related to Revolve’s sites and find improving traffic and conversion for Revolve.com and strong initial traction at superdown. Strength in these metrics may suggest upside to our numbers for fiscal 2020, and with the stock close to lows (though still well above IPO price), we find the setup attractive. Traffic share to the review/confirm page has accelerated in the last 3 months, and superdown, Revolve’s lower-priced platform, has seen an increase in organic search share since the launch (from 27% in Mar to 45% in Aug) suggesting growing brand awareness.
The Jefferies price objective is a gigantic $65. The posted consensus estimate is much lower at $33, and the shares closed most recently at $22.84 apiece.
Vertex Pharmaceuticals
This has long been considered a buyout candidate, and it has traded sideways for almost a year.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) engages in discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases in specialty markets. The company focuses on developing and commercializing therapies for the treatment of cystic fibrosis and hepatitis C.
Wall Street as a whole has remained very positive on the stock for years, and some have indicated that the company could have as much as $10 to $15 in potential earnings-per-share power going forward. The Jefferies analysts agree, are very positive and noted this in their coverage:
We see 3-6 early stage programs that reflect $1 billion-$5 billion in revenues all beginning to read out in in 2020 and we conduct a deep dive into Alpha-1 antitrypsin (AAT)which is one of the largest of the programs. Early data supporting increased AAT levels could read out in the first half of 2020, and Vertex has good pre-clinical data showing significant increases in corrected AAT protein folding.
Jefferies has set its price target at $195. The consensus target is $192.21, and the stock closed on Friday at $166.74.
These four incredible companies have solid earnings and a clear path higher for the fourth quarter and perhaps well into 2020. All these stocks hold a higher risk potential, so should they be added to accounts with commensurate risk tolerance.
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
