Increasingly, the Wall Street firms we cover are starting to agree that while the future is still bright for the U.S. economy, the next five years may be one of stock market gains that are much lower than the norm has been over the past 11 years. When that is the case, then investing strategies often shift from indexing to a more disciplined stock-picking routine. 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. The Jefferies team has reviewed the outlook for second-quarter results, and they are very positive going forward on some of the biggest and most powerful technology and momentum giants. We found four that look like solid picks for more aggressive growth investors.
While all four stocks are rated Buy at Jefferies, it’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Activision Blizzard
This remains a top gaming pick on Wall Street, and the Jefferies team remains very positive on it. 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. Its legacy franchise Call of Duty game continues to be hugely popular.
The analysts said this when discussing the potential for the company to make an acquisition:
We were out with a note taking stock of the M&A landscape within the video games space. For ATVI, we believe investors would react favorably to an accretive deal given the company’s history of value-creating corporate actions. Given the rarity of mega M&A in the video game space, we offered a high level look at the most notable private companies. We continue to see a visible path to two straight years of earnings growth for ATVI, driven by forecasts moving higher and a ~26x EPS multiple.
Investors receive just a 0.55% dividend. The Jefferies analysts have set an $80 price objective on the shares. The Wall Street consensus target is $78.73, and Activision Blizzard stock traded early Monday at $76.00 a share.
Deckers Outdoor
This clothing manufacturer makes some of the hottest selling products, and it could be poised for a big holiday selling season. Deckers Outdoor Corp. (NYSE: DECK) designs and markets footwear and accessories for men, women and children. Deckers sells its products, including accessories such as handbags, headwear and outerwear, through domestic and international retailers, international distributors and directly to end-user consumers both domestically and internationally, through websites, and retail stores under the UGG (73% of revenue), HOKA (14%), Teva (6%), Sanuk (3%) and Koolaburra (3%) brands.
The analysts have championed this company for some time and noted this in the research report:
Deckers Outdoors is proving exceptionally resilient in navigating COVID, thanks in large part to its strong brands (UGG, HOKA) which are demonstrating robust, channel-agnostic consumer demand. While UGG is typically viewed as a fall/winter brand, UGG’s strong sell-through during COVID helped further legitimize its standing as a year-round brand. In addition, HOKA remains on a path to be a $1B+ brand, and we continue to see L-T growth opptys in hiking/training, int’l and new product categories. We raised our estimates and model F21 and F22 EPS ahead of consensus.
The Jefferies price objective is $245, but the consensus target is just $203. Deckers Outdoor stock traded early Monday at $187.30.
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