Investing

10 Jefferies High-Conviction Stock Ideas for the Rest of 2020

With stocks at record highs, and top Wall Street strategists like Jefferies Sean Darby cautioning that perhaps we have moved into a “euphoria” stage, it makes sense for investors to not only exercise caution when selecting stocks but to manage what Darby terms as “draw-down” risk.

A new Jefferies research report, while noting that caution, also includes 10 high-conviction stock picks for growth investors to consider for the rest of 2020 and beyond. While not all of these are suitable for every investor, growth investors with a degree of risk tolerance looking for companies that can maintain a substantial edge should find something to their liking in this group.

While all these stocks are rated Buy at Jefferies, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

AMD

This top company appears to have turned the corner in a big way, but shares sold off after earnings. 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.

Shares rose last year on the back of Google’s announcement concerning Stadia at last year’s game developers conference. The AMD CEO had noted that Google’s cloud gaming platform was using AMD Radeon GPUs and the announcement then confirmed it. The close partnership suggests that Google ultimately may announce that it will use EPYC 2 server MPUs.

Jefferies noted that “Analysis of instance availability at the top cloud service providers shows ongoing share gains for AMD in CPU’s. But gains by ARM’s Graviton are worth monitoring.”

Jefferies has a $95 price target on Advanced Micro Devices stock. The Wall Street consensus target is $76.15, and the last trade Friday came in well above that level at $85.55.

Equifax

This company suffered a stunning security breach a few years ago and has fought back to be much stronger. Equifax Inc. (NYSE: EFX) provides credit and risk management solutions to businesses and consumers. The second-largest U.S. credit bureau (based on revenue), the company also operates in 19 other countries.

Equifax has amassed data on approximately 820 million consumers, 91 million businesses, 280 million employee files, 201 million public records and 5.8 billion trade accounts. Products and services include consumer reports, risk scoring and analytics, income and employment verification, decisioning services and marketing services.

In the report, the analysts note that Equifax is the only credit bureau that is cloud native and has a real competitive advantage in bringing new products to market quickly.

The $207 Jefferies price target is well above the consensus figure of $186.71. Equifax stock ended last week’s trading at $168.37.

Facebook

The huge social media leader has been on a roll, and the analysts remain very positive. Facebook Inc. (NASDAQ: FB) is the largest social network, with over 2.0 billion monthly active users and over 1.6 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.

The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger, a messaging application for mobile and web on various platforms and devices, enables people to reach others instantly, as well as enable businesses to engage with customers. WhatsApp Messenger is a mobile messaging application.

Jefferies said, “Our proprietary survey of 800+ US Instagram users supports our view that Reels could be Facebook’s next key product catalyst.”

Jefferies has set a $310 target price, while the posted consensus target is $284.24. Facebook stock closed at $293.66 on Friday.