Technology

Jefferies Top US Growth Stocks to Buy Are Red-Hot Tech Leaders

ServiceNow

This stock had an incredible 2018 and remains a top Wall Street pick. ServiceNow Inc. (NYSE: NOW) develops and sells a hosted, subscription-based suite of services designed to automate various IT department functions, such as help desk, operations management and change/release management.

The company also sells a number of applications that automate various self-service related applications outside of the IT department, such as HR onboarding, facilities requests and governance, risk and compliance.

ServiceNow blew out first-quarter earnings, and the analysts said this regarding the quarter’s progress and the rest of 2019:

The Company reported a strong first quarter beat last week with subscriber revenues coming in +36% year-over-year. We note that the Federal business was a key driver, with that segment accounting for 15% of net new annual contract value up from 6% in first quarter 2018. Gross margin was also in line, with Operating margins 2.6% higher than expected as some expenses pushed to the second quarter. Management raised second quarter above consensus and fiscal 2019 guidance increased by more than the first quarter beat. We raised our 2019 and 2020 estimated EPS estimates slightly and remain 4% and 3% ahead of consensus, respectively.

The $285 Jefferies price objective compares with the $275.77 posted consensus target price. The stock closed trading most recently at $271.51 a share.

Tesla

This has been one of the most talked about companies over the past two years, and the Jefferies team remains positive on the shares. 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.

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.

The stock has been volatile, and CEO Elon Musk is unpredictable as well. However, the analysts remain positive and noted this after the first-quarter report:

The Company reported first results last week that were mixed. We noted that the revenue shortfall in the quarter was more than accounted for by vehicles sold with residual value commitments. We expect that this should not recur, unless Tesla fails to stabilize its pricing policy. That said, auto gross margin of 20.2% came in better than feared. In addition, the company maintained fiscal year delivery guidance of 360-400,000 units and reiterated strong demand. We also point out that on the call, management sounded more open to raising capital to address current inefficiencies in logistics. We remain confident there is a path to sustained profitability.

The Jefferies price target remains at a stunning $400. The analysts’ consensus estimate was last seen at $296.53, and the stock ended Tuesday at $238.69.

These four stocks all offer investors strength in their specific technology industry silos and the ability to generate some significant portfolio alpha. It should be noted that they are only suitable for aggressive growth accounts that have a much larger degree of risk tolerance.