Shades of 2000 are hanging over the market, as the “hanging chads” did then. The presidential election results are being disputed, and this could go on into next year. The Bush/Gore battle took an additional 37 days when the election results were disputed in Florida, and ultimately it was decided by the U.S. Supreme Court. While that seems unlikely this time, the litigation at various state and local levels could drag on for some time.
With that in mind, we screened the top growth stock picks from Jefferies this week, as we do each week, looking for stocks that look unlikely to be affected by the outcome of the presidential election. We found four that look like very solid ideas now, and while all 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.
Trading volume is exploding and looks to continue, and this stock is a great way to play that theme. Intercontinental Exchange Inc. (NYSE: ICE) was founded in 2000 as an over the counter (OTC) energy market and has since expanded both organically and through acquisitions. The firm offers central clearing services for the futures and OTC markets. Its primary products include agriculture, financial and energy contracts and credit default swaps.
The company recently completed a transformational acquisition of NYSE Euronext that greatly diversifies the company while offering significant optionality.
Jefferies has stayed bullish on the shares and noted this:
Management reiterated the strength of the Ellie Mae business in the short term driven by an acceleration in originations and a backlog of refi’s. While the low interest rate environment has certainly been a tailwind for near-term growth, management believes ICE Mortgage Services is well- positioned to generate +8-10% in annualized long-term growth over the next decade. As for the data business, growth in index revenue, fixed income capabilities and ESG position ICE well for consistent 5-6% growth in this business. Further, with the Presidential election still undecided, ICE’s revenue mix is a favorable combination for this uncertain time.
Investors receive a 1.22% dividend. Jefferies has set a $117.50 target for the shares, which is very near the Wall Street consensus target of $117.14. Intercontinental Exchange stock closed Monday at $98.22.
This top bank makes good sense for investors for 2021 and beyond. KeyCorp (NYSE: KEY) operates as the bank holding company for KeyBank National Association, which provides deposit, lending, cash management and investment services to individuals, small and medium-sized businesses.
The company also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets banner.
The analysts noted this about the bank’s prospects:
We hosted meetings with management and continue to see scope for significant cost improvement. While the company has trimmed 3-5% of gross costs annually, management still sees levers to pull. The acceleration of digital uptake will result in a thinner branch footprint, with a faster pace of closures likely versus the recent 2-3% annual pace. Meanwhile, the exiting of the indirect auto business, and refocusing on Laurel Road and mortgage should have long-term benefits. That said, while PPP loans will help reported net interest income for fiscal 2021, core NII still faces pressure and is not likely to bottom until fiscal 2022.
KeyCorp stock investors receive a 4.87% dividend, which the bank claims will remain intact. The Jefferies target is $15, and the consensus target is $13.88. The shares ended Monday’s trading at $15.20, up almost 19% on the day.