3 Top-Rated Cowen Focus Call Stocks to Buy Now

By Lee Jackson Published Sep 18, 8:40AM EDT

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With the Federal Reserve chatter quiet for at least the time being, after this week’s announcement of no increase in interest rates, investors need to refocus on the top stock calls that may make sense in aggressive growth portfolios as we get ready to start the fourth quarter soon. In what has been a very difficult market to trade this year, adding growth companies with a positive investment thesis makes good sense now.

A new research report from Cowen has focus call stocks to buy that seem to blend well with the current thesis the analysts have. Three of the companies would be very good additions to aggressive growth portfolios. All are related Outperform at Cowen.

American Eagle Outfitters

This top retail stock had acted good all year and earnings have been solid, but the stock still got hit hard in August. American Eagle Outfitters Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle Outfitters and Aerie brands. The company operates more than 1,000 stores in the United States, Canada, Mexico, China, Hong Kong and the United Kingdom, and ships to 81 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at 119 international stores operated by licensees in 18 countries.

Investors were cheered and the stock rallied as news that Jay Schottenstein, who serves as the executive chairman and interim CEO reported buying 500,000 shares at a weighted average price of $15.74 per share. He has been consistently buying shares over the past year.

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After a meeting in London with management, Cowen highlighted the clothing segment’s best denim execution and on-trend fashion. They think those positives could drive traffic upside, as well as long-term drivers of international, Aerie, digital and omni inventory. Good execution, solid inventory control and the recent pullback in the stock are all bullish items as well.

American Eagle investors are paid a solid 3.05% dividend. The Cowen price target for the stock is $20, and the Thomson/First Call consensus target is $19.13. Shares closed most recently at $16.26.
Boeing

This top aerospace industrial has sold off recently, offering investors a very solid entry point. Boeing Co. (NYSE: BA) has been on a downward trend since late February and may be ready to perk up. The company and its subsidiaries design, develop, manufacture, sell, service and support commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.

Cowen met with top management and has increased confidence in continuing good demand, 787 execution is good as the company works through the backlog, and cash flow looks to be strong with 787 deliveries and C-17 orders. The analysts also point to low oil prices as a bullish indicator for the top carriers that are Boeing’s big customers.

Boeing investors are paid a solid 2.63% dividend. The Cowen price target is $175, and the consensus target is $164. The shares closed trading on Thursday at $137.45.

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Shire

This is one of the Cowen top picks in specialty pharmaceuticals. Shire PLC (NASDAQ: SHPG) develops, licenses, manufactures, markets, distributes and sells pharmaceutical products. It offers various products for the treatment of attention deficit hyperactivity disorder (ADHD), and it also focuses on the development of resources projects in various therapeutic areas, including rare diseases, neuroscience, ophthalmics, hematology and gastrointestinal disorders, as well as early development projects primarily on rare diseases.

The Cowen analysts view the rather mixed market reaction to the Baxalta bid, and the market correction, as providing investors a compelling opportunity to refocus on the company’s true intrinsic value. Shire publicly placed its bid for Baxalta on August 4, offering 0.1687 of its American depositary shares for each Baxalta share, valuing them at $45.23 apiece. The offer represented a premium of 30% over the company’s stock price then. Baxalta initially said the bid was to low and recent reports indicate Shire is looking to sweeten the offer.

The Baxalta acquisition could produce $13 billion in revenues for Shire’s rare disease portfolio by 2020, according Bloomberg Intelligence analysis. Sales at the combined entity are projected to reach $20 billion. Cowen thinks that upcoming Lifitegrast PDUFA on October 25, which was granted a priority review by the FDA, is an important catalyst for Shire on a standalone basis and for the Baxalta bid prospects.

The Cowen price target of $325 is well above the $283.91 consensus target. The stock closed at $223.39.

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While these companies are not suitable for all investors’ portfolios, they have outstanding upside potential and far less downside than high-flying momentum stocks.

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.