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

Keurig Dr Pepper

The combination of coffee and a unique and a beloved soft drink makes this a stellar long-term play. In 2018, Keurig Green Mountain and Dr Pepper Snapple merged to form Keurig Dr Pepper Inc. (NYSE: KDP).

The company is a leading producer of specialty coffee and single-serve brewing systems available in more than 20 million homes and offices in North America. Keurig has partnerships with many global coffee, tea and cocoa brands.  Dr Pepper is the third largest carbonated beverage producer in the United States, with strength in flavored (non-cola) carbonated beverages. It also has a diverse portfolio of noncarbonated beverages.

The analysts cited accelerated coffee pod/brewer trends and rising household penetration as set to inflect organic growth above consensus. That is a huge positive for shareholders.

Investors in Keurig Dr Pepper stock receive a 2% dividend. Jefferies has set a $40 price target, which compares to the consensus target of $33.81, as well as Friday’s closing price of $30.07.

Lowe’s

This company has a low 6% of foreign sales and is a top pick at Jefferies for the suburban flight story. Lowe’s Companies Inc. (NYSE: LOW) is a leading home improvement retailer with more than 2,000 stores in North America. The company has tempered its new store opening plans and is focusing investments on technology and e-commerce capabilities, in addition to improving its retail store productivity.

Lowes offers products for maintenance, repair, remodeling and home decorating. It provides home improvement products under the categories of kitchens and appliances, lumber and building materials, tools and hardware, fashion fixtures, rough plumbing and electrical, lawn and garden, seasonal living, paint, home fashions, storage and cleaning, flooring, millwork, and outdoor power equipment. The company also offers installation services through independent contractors in various product categories.

Jefferies analyzed the company’s new tool rental business and the firm sees a $1.5 billion revenue opportunity and a catalyst for multiple expansion.

Investors receive a 1.45% dividend. Jefferies raised its $193 price target to $205. The consensus target is $181.50, and Lowe’s stock was last seen trading at $166.08.

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Martin Marietta Materials

This remains a favorite across Wall Street, especially if a large infrastructure package emerges, and it is also on the Jefferies Franchise Picks list. Martin Marietta Materials Inc. (NYSE: MLM) is one of the largest U.S. suppliers of aggregates, with operations across 27 states, Canada and the Bahamas. Its largest concentration is in Texas, comprising approximately a third of its exposure.

The company remains upbeat on 2020 construction demand and noted that many states with its greatest exposure were well positioned for housing and public nonresidential construction growth.

As the analysts noted in the report, “Our roadshow revealed optimism in the prospects of infrastructure bill passage in the first half of 2021 and volumes returning to growth in the second half of 2021.”

Investors receive a 1.1%% dividend. The Jefferies price objective is $267. The consensus target price is $245.11, and Martin Marietta Materials stock closed most recently at $222.48 a share.

Tesla

This has been one of the most talked-about companies over the past two years, and Jefferies remains very positive even though the shares have skyrocketed. 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.