4 Top US Growth Stock Calls for This Week From Jefferies

By Lee Jackson Updated Jun 16, 10:22AM EDT · Published Jun 16, 9:10AM EDT

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Uh-oh, it is looking like the sword of Damocles in the shape of Greece has returned, and back with it the volatility that we experienced a few years ago. What that means for investors looking beyond the current volatility is the time has come to only make very solid growth stock purchases. In a new research note, Jefferies has locked down four solid ideas to buy for this week.

The Jefferies team is doing the right thing and staying away from high-volatility momentum stocks that will get bogged down if we get stuck in a correction. This week’s four top U.S. Growth Calls are all companies that have solid staying power and are not overvalued.

Charles Schwab

The iconic discount broker looks solid from a technical standpoint. The Charles Schwab Corp. (NYSE: SCHW) provides wealth management, securities brokerage, banking, money management and financial advisory services. It operates through two segments: Investor Services and Advisor Services.

Goldman Sachs recently upgraded the discount broker on the belief that the earnings outlook is underappreciated given the potential for deposit growth in an environment of rising interest rates. The Goldman analyst noted that Schwab has identified $75 billion worth of customer assets it can sweep in its banking business could “meaningfully” add to earnings. A rising rate environment tends to benefit banks because it allows them to earn a higher spread between what they pay and receive in interest.

Charles Schwab investors are paid a slight 0.72% dividend. The Jefferies price target for the stock is $35, and the consensus price target is $34.58. Shares closed Monday at $33.05.

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Fiesta Restaurant Group

This stock has been hit hard since the spring and looks ready to bounce. Fiesta Restaurant Group Inc. (NASDAQ: FRGI) is the parent company of the Pollo Tropical and Taco Cabana restaurant brands. The brands specialize in the operation of fast-casual, ethnic restaurants that offer distinct and unique Caribbean and Mexican inspired flavors with broad appeal at a compelling value. The brands feature made-from-scratch cooking, fresh salsa bars and drive-thru service and catering.

The Jefferies team recently met with management and came away feeling that the strong growth drivers and underlying fundamentals that have driven solid growth are still in place. New store volume at Pollo Tropical in Texas is strong, with some even exceeding Florida, which is the franchise’s home state. The Jefferies analysts feel that the 23% sell-off since March is a buying opportunity.

The Jefferies price objective for the stock is $70, and the consensus target is $68.50. Shares closed Monday at $52.08.

Texas Capital BancShares

This leading mid-cap bank is in a very strong area of the country economically. Texas Capital BancShares Inc. (NASDAQ: TCBI) is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and entrepreneurs. Headquartered in Dallas, the bank has full-service locations in Austin, Dallas, Fort Worth, Houston and San Antonio. With all of those markets showing outstanding growth, and economies stronger than much of the country, the opportunities for a local bank run by well-known Texans is huge.

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The Jefferies team sees the company as a top pick, given loan growth and exposure to pending rate hikes, as much of the loans are floating rate and commercial and industrial.

The Jefferies price target is posted at $62, and the consensus target is $56.60. The shares closed most recently at $59.69.

United Natural Foods

This company is one of the top natural foods companies to buy. United Natural Foods Inc. (NASDAQ: UNFI) carries and distributes more than 80,000 products to more than 40,000 customer locations throughout the United States and Canada. It serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. United Natural Foods was ranked by Forbes magazine in 2014 as one of America’s Best Managed Companies.

Because the company sells to more than 30,000 retail locations and sells 65,000 different products, it has less specific retailer or supplier mix. This has been an attractive feature over the years for investors who believe in the long-term growth of natural foods but are unsure about which retailers or suppliers ultimately will win.

The company reported last week, with earnings per share missing the Jefferies estimates and consensus as well, largely on weaker gross margins. The analysts see trends improving and they think that organic sales growth may have bottomed here. With new wins on the West Coast, the bottom line for investors is to buy the weakness on this outstanding company.

The Jefferies price target is an aggressive $84, while the consensus target is much lower at $73.11. The stock closed on Monday at $62.30.

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These ideas are good aggressive stocks to buy for investors looking to add companies that are not the proverbial overcrowded stocks. We could very well be back to the Greek “Groundhog’s Day” period, so investors need to stay wary.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.