With earnings all but over for the third quarter, Wall Street has handicapped the winners and losers, and now it’s time for what many hope is a year-end rally to get the indexes up more. The Nasdaq leads all the major indexes decidedly, up 8.3%, versus less than 2% for the S&P 500 and a very sluggish one-quarter of 1% for the Dow Jones Industrial Average.

In a new Jefferies research report, the weekly U.S. Growth Stock calls are led by some technology leaders that could be poised for an outstanding fourth quarter and a very strong 2016. We highlight four that are appropriate stocks for aggressive accounts with a high risk tolerance.

Activision Blizzard

This company reported outstanding earnings recently, made a huge acquisition and is a Jefferies Franchise pick stock as well. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. It develops and publishes interactive entertainment software products through retail channels or digital downloads, as well as downloadable content to a range of gamers. Its Call of Duty franchise has propelled earnings for this industry powerhouse for years.

The big news recently was the company’s purchase of Candy Crush saga creator King Digital Entertainment. Jefferies, and most of Wall Street, think the buy is an outstanding move for the company, and specifically the synergies between the two companies is cited. Analysts feel that the key to unlocking some monster value is creating and cross-promoting the Activision product inside the King Digital mobile distribution network.

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Jefferies thinks the guidance Activision gave when it reported is very conservative. The firm also thinks the content the company will release in the rest of 2015 is outstanding and not fully reflected in the guidance. The growth in the quarter was particularly impressive given two challenges: the strong dollar and unfavorable comparisons to the prior year quarter, which were lifted by strong sales of The Amazing Spider-Man 2. Much of that growth was fueled by Destiny, Heroes of the Storm and Hearthstone, which now have 70 million registered players combined. The three titles have generated over $1.25 billion in non-GAAP revenues to date.

Activision investors receive a 0.7% dividend. The Jefferies price target for the stock is raised to $45. The Thomson/First Call consensus target is $40.90. The stock closed Friday at $35.
BroadSoft

After a strong earnings report last week, this stock spiked up 14%. BroadSoft Inc. (NASDAQ: BSFT) is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer unified communications over their Internet protocol networks. BroadSoft’s core communications platform enables the delivery of a range of enterprise and consumer calling, messaging and collaboration communication services, including private branch exchanges, video calling, text messaging and converged mobile and fixed-line services.

The company’s network transformation projects are driving near and longer term revenue ahead of the firm’s current and Wall Street forecasts, with eventual operating leverage perhaps starting next year. BroadSoft’s voice-over-Internet-protocol (VoIP) services have been in-demand at the carriers and should be able to drive Verizon orders. The Jefferies focus is on the migration for many consumers and businesses into IP telephony, and the analysts see BroadSoft as one of the leasing beneficiaries.

Jefferies noted that for the first time in 14 quarters, BroadSoft raised guidance versus the Wall Street consensus. Jefferies raise its estimates for 2015 and 2016.

The Jefferies price target is $48, and the consensus target is $41.71. The stock closed Friday at $38.76.

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Facebook

The huge social media leader posted gigantic numbers that truly blew most of Wall Street away. Facebook Inc. (NASDAQ: FB) has Instagram, which Jefferies sees tripling revenues in 2017 over 2016, as well as Premium video and Graph Search capabilities to strengthen the social media giant’s earnings flow. Some analysts feel that the company can drive revenue growth even without a huge increase in advertising placement. Jefferies notes that Facebook and Instagram account for 5% of users total media time, but the company doesn’t come close to capturing 5% of total advertising budgets.

Most Wall Street analysts point to the fact that Facebook remains the top beneficiary of the adoption of mobile Internet trends, with total U.S. Internet time spent on Facebook and Messenger. Other metrics continue to explode, and the key is there are no viable challengers anywhere in sight. Jefferies cites positive monthly data use, easier growth comparisons and positive data on ad revenue drivers as the top catalysts. The firm views Facebook’s longer term opportunities as almost unmatched by their mega-cap consumer Internet peers.

Facebook also announced last summer a willingness to share ad revenue to acquire premium content, a totally new avenue for the company. It hopes to draw content away from Google’s YouTube. Facebook will offer contributors 55% of the revenue from ads that appear alongside videos, the same split as YouTube. Daily video views have gone from 1 billion to 8 billion between September of last year and now.

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The $135 Jefferies price target is well above the consensus target of $123.43. The shares closed Friday at $107.10.

NVIDIA

This top tech stock also reported outstanding earnings. NVIDIA Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles. It also is moving into visual computing chips for cars, mobile devices and supercomputers. NVIDIA has a technology partnership with electric car maker Tesla.

The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.

Jefferies noted that last week’s earnings per share were way ahead of estimates, and the first quarter outlook implies earnings per share 26% ahead of current consensus. With gaming revenues up 44% year over year, the analysts believe there remains a high overall Wall Street skepticism around the company as most are unaware of the positive dynamics in the PC gaming and esports markets.

NVIDIA investors receive a 1.24% dividend. The Jefferies price objective is $38, and the consensus target is $30.04. The stock closed Friday at $31.55.

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Jefferies is focusing on companies that not only delivered outstanding earnings, but look like they have the potential to continue strong reporting. Chasing bad technology stories makes no sense when aggressive growth investors can buy these top companies.

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