As more of the top firms we cover here at 24/7 Wall St. fine-tune or release the top picks from the analysts at their firms, we are definitely seeing a trend. The long-running bull market has made many analysts cautious about everything from currency headwinds to overvaluations to geopolitical issues. This caution is good for investors looking to stay involved with equity holdings. A new and sizable report from Credit Suisse highlights the firm’s top picks for 2015.
With 144 top ideas from the Credit Suisse analysts, that represents 16% of the more than 900 companies covered by the firm. We scanned through all the picks looking for the stock ideas with the biggest upside to the Credit Suisse price targets. It makes for an eclectic group of stocks to buy to say the least.
Goldman Sachs
Goldman Sachs Group Inc. (NYSE: GS) continues to be the gold standard of Wall Street banks, and the Credit Suisse team views the firm as best-in-class. With a high net worth clientele, top investment banking and capital markets expertise, the firm continues to be a dominant force around the world. Very few firms can dictate who can be a customer, and Goldman is one of those few. The company is another major Wall Street firm that is benefiting from the long, secular bull market run. The analysts feel that Goldman will continue to deliver fundamental results that are at the high end of the peer group.
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Goldman Sachs investors are paid a 1.35% dividend. The Credit Suisse price target is $225. The Thomson/First Call consensus estimate is much lower at $192.23. Goldman Sachs closed Wednesday at $178.78.
Micron Technology
This leader in DRAM chip sales is one of the top Credit Suisse memory picks. With a potential looming memory shortage, Micron Technology Inc. (NASDAQ: MU) stock could have serious upside potential. The latest data indicates that David Einhorn’s Greenlight Capital still holds around 30 million shares of the stock, after selling some in the late summer and fall last year. The Credit Suisse analysts see strong growth for DRAM, especially from the in-memory and handset silos. They also think they company has earnings-per-share potential as high as $5.
The Credit Suisse price target is a whopping $50, and the consensus target is $42.34. Micron closed Wednesday at $29.03.
Tesla Motors
Despite it being the momentum buyer’s dream stock over the past two years, volatility has hit the electric car maker recently. Some Wall Street analysts project a successful production ramp for the company of 1,900 vehicles per week run-rate for 2015.
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They also expect Tesla Motors Inc. (NASDAQ: TSLA) to unveil marked margin expansion, the introduction of the highly anticipated Model X, gigafactory news and new partnerships announcements. The Credit Suisse team sees Tesla with competitive advantages over the competition, as well as the overall electric market eating into the $1 trillion new vehicle market, albeit slowly over time.
The Credit Suisse price target for the electric car giant is a huge $325, and the consensus target is $272.16. Shares closed trading on Wednesday at $218.55.
MGM Resorts
Combining a very strong presence in Las Vegas and growing clout in Macau, MGM Resorts International (NYSE: MGM) is poised to perhaps break out after years of so-so trading. While still burdened with high debt, at least some of that debt has been refinanced at lower levels.
Goldman Sachs and other Wall Street analysts find MGM to have among the most favorable risk-reward, given the combination of exposure to improving trends on the Las Vegas Strip and the continuing growth in the mass market segment in Macau in the near-term, as well as steady balance sheet improvements and its development pipeline in the medium term. While the Macau business fell off dramatically in the last half of 2014, MGM is not as dependent on it for overall revenue. The new Casino in Cotai could open as soon as this time next year.
Credit Suisse has a $30 price target, and the consensus target is $26.95. Shares closed Wednesday at $19.87.
OvaScience
This global life sciences company is focused on the discovery, development and commercialization of new fertility treatments. The company’s patented technology is based on the discovery of egg precursor cells, which are found in the ovaries. It is developing various fertility treatment options designed to enhance egg quality and in vitro fertilization (IVF) comprising AUGMENT to improve egg quality and increase the success of IVF. The Credit Suisse team sees OvaScience Inc. (NASDAQ: OVAS) as a huge binary possibility, and if any of the company’s products succeed, the upside for the stock could be huge.
The Credit Suisse price target is a very large $70, and then consensus is posted at $59.86. The stock closed at $41.95 a share.
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Southwest Airlines
Southwest Airlines Co. (NYSE: LUV) is a top transportation stock that makes the Credit Suisse list. With the domestic market showing good strength, and the pricing environment looking very solid for 2015, revenues should stay strong and continue to grow. Tumbling jet fuel prices, which is almost 30% of Southwest’s total costs, have been a key for improving revenues and earnings. With almost no international business at this time, currency headwinds are not an issue for the airline, which Credit Suisse views as the preferred U.S. play for pricing stability.
Southwest investors receive a small 0.6% dividend. Credit Suisse has a huge $62 price objective, while the consensus price target is $55.56. The stock closed Wednesday at $44.64.
SunEdison
One of the top cleantech picks at Credit Suisse, SunEdison Inc. (NYSE: SUNE) is widely recommend around other Wall Street firms as well. The company manufactures solar technology and develops, finances, installs and operates distributed solar power plants, delivering predictably priced electricity and services to its residential, commercial, government and utility customers.
SunEdison also provides 24/7 asset management, monitoring and reporting services for hundreds of solar systems worldwide via the company’s Renewable Operation Center. SunEdison and its yieldco company, TerraForm Power, signed a definitive agreement in November to acquire First Wind for a total sum of $2.4 billion. The combined entity becomes one of the largest clean energy companies in the world. The analysts feel that the cash generation potential of SunEdison due to the multitude of positive corporate moves is becoming increasingly clear and could enable realization of their sum-of-the-parts-based value of $34 share.
The Credit Suisse price target is set at the aforementioned $34. The consensus target is $28.08, and the stock closed Wednesday at $20.02.
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As advertised, a good sample of the stocks on the Credit Suisse list, and an eclectic group for sure. These are all reasonably aggressive stock ideas and really only suitable for aggressive growth portfolios.
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