It sure seems like the financial media and pundits are turning bearish, despite the fact that overall sentiment is lousy and has been for some time, and some market metrics could be setting up for some outperformance soon. A new research report from Jefferies makes the case that we could actually rally some after weakness in the advance decline line showed up last week.

The Jefferies team is also very bullish on four U.S. stocks that they think are outstanding buys now. While two are total contrarian calls, that may not be a bad road to go down with the overall market pretty rich.

Carrizo Oil & Gas

This is a top energy stock for value investors to consider and was upgraded to a Buy this week at Jefferies. Carrizo Oil & Gas Inc. (NASDAQ: CRZO) is a Houston-based company actively engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Carrizo’s current operations are principally focused in proven, producing oil and gas plays in the Eagle Ford Shale in Texas, Ohio’s Utica Shale, the Niobrara Formation in Colorado and the Marcellus Shale in Pennsylvania.

Many on Wall Street see the company as one of the best positioned due to the low break-even costs, solid operating scale and a very good balance sheet with ample liquidity. The analysts also think the company may take advantage of difficult situations for others and make acquisitions, especially in the Eagle Ford.

The Jefferies price target on the stock is $65. The Thomson/First Call consensus target is $58.38. Shares closed Friday at $38.13.

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Nike

This top consumer discretionary stock has had an outstanding summer so far, up a sizzling 6.6%. Nike Inc. (NYSE: NKE) is a worldwide athletic giant and posted very strong fiscal fourth-quarter earnings in June. The company also has outstanding potential upside from a turnaround in its China business, improvements in gross margins and continued innovation-driven market share gains in both basketball and running footwear. With one of the most recognizable brands in the world, long-term investors may do very well adding shares here, despite the big move up in the stock this year.

Nike is benefiting from consumer preferences for “athleisure.” With the company’s extensive product line and recognizable worldwide branding, the stock continues to roll on year-after-year.

Investors are paid a 1% dividend by the sporting apparel giant. The Jefferies price target is $128, and the consensus target is posted at $117.57. Nike closed at $115.22 per share on Friday.
PayPal

This company was spun off from eBay recently and many on Wall Street think the real growth is in the payment sector. PayPal Holdings Inc. (NASDAQ: PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. It enables businesses of various sizes to accept payments from merchant websites, mobile devices and applications, as well as at offline retail locations, through a range of payment solutions across the company’s payments platform, including PayPal, PayPal Credit, Venmo and Braintree products. The company’s platform allows customers to pay and get paid, withdraw funds from their bank accounts and hold balances in their PayPal accounts in various currencies.

The Jefferies team thinks that revenue growth of 16% over the next five years is possible and the scarcity value, or lack of competition, could help drive the multiple for the company. The analysts also pointed the new acquisitions PayPal has made, like Venmo and Paydiant, that are leveragable. They also think that the eBay separation is likely to help the company’s positioning with large merchants.

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Jefferies initiates coverage with a Buy rating and a $44 price target. The consensus price objective is $43.48. The stock closed on Friday at $38.70.

Twitter

The stock was hammered again after recent earnings and user numbers came in below expectations. Twitter Inc. (NASDAQ: TWTR) is either a total value tech buy or caught in a death spiral, depending on who you ask on Wall Street. High multiple valuations, issues with the ongoing search for a new CEO and overall terrible negative market sentiment has trampled the stock and made it a favorite target of short sellers.

The Jefferies team remains positive on the stock and cite the fact that monetization was strong, with revenues better than some estimates. The problem is the company added only 2 million core monthly active users (MAU), and also said that it does not expect to see meaningful growth in MAUs for a considerable time. That brought the stock market hammer. The analysts are bullish on long-term users and what they call “engagement improvement.” It is also important to remember that the Google traffic partnership is a catalyst that still lies in front of the stock.

The Jefferies price target for the stock is a whopping $56, and the consensus target is a much lower at $41.39. The stock closed on Friday at $31.09, down over 15% last week.

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The Jefferies calls are part contrarian and part sheer growth. All four make sense, but for the more contrarian ideas, they should really only be bought by aggressive accounts with a big tolerance for volatility.

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