The pricier the stock market gets, the more important it becomes for growth investors to make very sure the companies they are investing in are worth any premium valuation that they may be paying. Especially if the stock is a high-beta name. With geopolitical issues seemingly everywhere around the globe, the overall risk and volatility has been moved up a notch.
A new report from Credit Suisse includes a screen for high-quality and momentum thematic growth stocks. The analysts have many requirements for stocks that fit in this category, and the multiple theme frameworks share nuances, like growth that is consistently underestimated and disruptive technology.
We screened the Credit Suisse list for their top picks that are rated Outperform by the firm’s analysts.
Baidu Inc. (NASDAQ: BIDU) has become a momentum investor’s dream stock. The company’s mobile search has accounted for 30% of search revenue during the second quarter of this year, with mobile traffic above personal computer traffic during holidays. The Credit Suisse team highlights four major catalyst: (1) solid revenue being contributed from mobile search, (2) higher usage traction on mobile search traffic, (3) positive online active customers and revenue per online marketing customer growth, and (4) better margin trends due to operating leverage.
The Credit Suisse price target for the stock is set at $260. The Thomson/First Call target that was posted appeared to be incorrect. The stock closed trading on Monday at $220.47 a share.
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Halliburton Co. (NYSE: HAL) remains one of the top names across all the firms we cover on Wall Street, and it is also rated Outperform at Credit Suisse. The analysts point out the Halliburton is the largest provider of hydraulic fracturing in the world, and it will continue to benefit from what they term as the “shale revolution.” The company also stands to benefit from continued robust levels of domestic drilling activity and a pick-up in international markets. Management believes the company can deliver earnings per share of $6 by 2016, double the level from 2012.
Halliburton investors receive a 0.9% dividend. The Credit Suisse price target for the oilfield services giant is a huge $95, and the consensus price estimate is much lower at $82.44. Halliburton closed Monday at $65.61.
Pioneer Natural Resources Co. (NYSE: PXD) is a huge player in the Permian basin and the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second largest oil reservoir in the Midland Basin. In addition, the company owns its own frac fleets, allowing Pioneer to be a low-cost, high-margin producer. Pioneer was also one of the firms named by the U.S. Commerce Department to produce and export condensates.
Rumors have swirled for some time that one of the big integrated companies may target Pioneer as a takeover candidate. It would be a very expensive deal as the company’s market cap is almost $29 billion. The Credit Suisse price target is $250, and the consensus target is $248.91. Pioneer closed trading on Monday at $201.96.
Priceline Group Inc. (NASDAQ: PCLN) is one of the highest rated Internet stocks on Wall Street with a strong 4.7 rating out of 5 by all analysts covering the stock. It makes the Credit Suisse list due to the company’s exposure to the untapped potential of the Internet. Trading at just 15.3 times fiscal year 2014 earnings, the travel giant is seen by the Credit Suisse team as an “open-ended” growth story. Most on Wall Street agree that the growth potential remains outstanding, with several long-term potential catalysts.
The Credit Suisse price target for the travel giant is a whopping $1,600. The consensus target is at $1,496.20. Priceline closed Monday at $1,161.05 a share.
SAP S.E. (NYSE: SAP) recently announced a $129 per share offer for Concur Technologies, which would extend the company’s reach into integrated travel and expense management solutions for companies worldwide. Concur’s cloud computing solutions help companies and their employees to control costs, save time and boost productivity by streamlining the expense management, travel procurement, itinerary management and invoice management processes. The Credit Suisse team feels that SAP is one of the leading players in the big data space, and that is another of their themes for stock selection. They also think that the earnings choppiness that SAP has seen over the past few years has been primarily currency driven and should abate soon.
The Credit Suisse price target for SAP in the report was priced in euros. The consensus price target is $65. The shares closed Monday way above that level at $72.45.
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The listed Credit Suisse stocks are suitable for aggressive growth portfolios. Investors who are looking for stocks that have a wide embrace of the future may be well served by buying one or more of these companies.
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