As is the case every year, the major Wall Street firms we cover here at 24/7 Wall St. come out with a list of stocks that they feel will be the top performers for the coming year. Last year was a veritable train wreck compared to most years, with everything from the COVID-19 pandemic that has crippled the economy on and off and killed hundreds of thousands, to a roller-coaster stock market that dropped 35% in less than a month and has since rallied to all-time highs, and more. Nonetheless, Wall Street analysts are doing their jobs and the top picks are coming out fast.
With so much concern that valuations are very stretched, it makes sense for investors to consider thinning the momentum herd in portfolios and perhaps looking for growth ideas that are less crowded. In fact, many analysts are suggesting broad sector rotation. However, a new research report from the Jefferies internet team suggests staying with mega-cap leaders for 2021.
The following are the firm’s four top picks from the sector. One caveat investors should consider is that many big tech companies are coming under scrutiny, and some feel they could be targeted with antitrust legislation from Congress. Lastly, while all are rated Buy a Jefferies, it is important to remember that no single analyst report should be used as a sole basis for any buying or
selling decision.
Alphabet
The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas such as search, advertising, operating systems and platforms, and enterprise and hardware products. The company generates revenue primarily by delivering online advertising and by selling apps and content on Google Play, as well as hardware products. Alphabet provides its products and services in more than 100 languages and in 190 countries, regions and territories.
The company offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as search, ads, commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
The analysts point to Google Cloud, which is the largest cloud infrastructure play and engages in more technology, infrastructure research and development in headcount and dollars than any other company. That gives it the strength and wherewithal to compete with and differentiate itself from Amazon’s AWS and Microsoft’s Azure.
Alphabet reported stellar third-quarter earnings, but some on Wall Street feel that blowout advertising revenues sure will not help the company in its fight against antitrust allegations.
The Jefferies price target for the stock is $1,850. The Wall Street consensus target is $1,936.55. Alphabet stock closed most recently at $1,727.62 a share.
Amazon
This is the absolute leader in online shopping and remains a technology anchor on the US 1 list of top stock picks. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. It has one of the most valuable brands in the world.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
Like every year, online sales continued to grow in 2020, especially during the busy Christmas shopping period, and as a result of the COVID-19 shutdowns, and Amazon remains the go-to portal for many shoppers.
Jefferies has a massive $4,000 price objective for the technology giant. The consensus estimate is $3,822.57, and last week’s final trade Amazon.com stock came in at $3,104.25.
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