Jefferies Has 4 Stocks to Buy That Could Beat the Street on Q3 Earnings

By Lee Jackson Published Sep 24, 10:55AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

One thing that always helps a stock get a solid boost is coming in and posting earnings and revenues that are better than the consensus numbers on Wall Street. That is especially if the company has either struggled some or is in a sector that is currently out of favor. A recent research note from Jefferies highlights four stocks that may very well have upside to current expectations.

Jefferies has circled four distinctively different companies that have the potential to beat the consensus views. With the third-quarter earnings season right around the corner, investors may want to rotate to one or all of these stocks. All are rated Buy at Jefferies.

AT&T

This company posted solid second-quarter numbers, and Jefferies thinks it could surprise next month as well. AT&T Inc. (NYSE: T) has to be one of the most ignored dividend plays on Wall Street. In fact, it is the third most underweighted security, and the most under-owned by active fund managers, according to Wall Street data. While growth has been admittedly slower over the past few years, the company continues to expand its user base, and strong product introductions from smartphone vendors has not only driven traffic, but increased device financing plans, an area that many on Wall Street believe could lead to some earnings weakness.

ALSO READ: Merrill Lynch Has 4 Pharma Stocks to Buy Against Political Chatter

Many analysts feel that the DirecTV deal was a positive addition to the AT&T family for content distribution and cross-selling, and it is a good bet that the synergies created by the deal are being underestimated by Wall Street. Many analysts see upside to wireless margins, which were a positive earnings driver in the second quarter and are expected to continue through the rest of the year. Jefferies analysts recently met with the CEO and came away feeling the giant carrier is close to hitting on all cylinders.

AT&T investors are paid an outstanding 5.83% dividend. The Jefferies price target for the stock is $40, and the Thomson/First Call consensus estimate is $37. Shares closed Wednesday at $32.20.
Boeing

This top aerospace industrial has sold off recently and is offering investors a very solid entry point. Boeing Co. (NYSE: BA) has been on a downward trend since late February and now may be ready to perk up. The company, together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.

Jefferies has increased confidence in continuing good demand, and notes that Boeing recently has made announcements that support the thesis that productivity and margins will continue to improve. 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. Some Wall Street analysts also point to low oil prices as a bullish indicator for the top carriers, who are Boeing’s big customers. Plus, Boeing just announced a huge $38 billion deal with the Chinese to sell them 300 planes.

Boeing investors are paid a solid 2.72% dividend. The Jefferies price target is $185, and the consensus target is $164. The shares closed on Wednesday at $131.67.

NVIDIA

This top company has started to make waves in the virtual reality world. NVIDIA Corp. (NASDAQ: NVDA) supplies graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles. It is also moving into visual computing chips for cars, mobile devices and supercomputers. The company has a technology partnership with electric car maker Tesla, and it has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified, which enables strong cash flow that is allowing a focus on capital return.

ALSO READ: 8 Great Value Stocks With Solid Dividends Under 10 Times Earnings

While the bulk of NVIDIA’s intellectual property revenues come from a licensing agreement with Intel, and some analysts have been concerned about the company’s exposure to the declining personal computer market, much of the company’s revenue growth is in the gaming arena. In fact, it dominates the GPU (graphic processor) space. GPUs are heavily utilized in the PC gaming market. Jefferies points to this gaming-related growth as among the under-appreciated areas for the company.

Investors are paid a 1.95% dividend. The Jefferies price target is $30, above the consensus target of $23.85. The shares closed Wednesday at $23.

Vantiv

This company has a reasonably solid following on Wall Street, and Jefferies thinks it can beat current expectations. Vantiv Inc. (NYSE: VNTV) is a leading provider of payment processing services and related technology solutions for merchants and financial institutions of all sizes.

Acquisitions have vaulted Vantiv to the second slot among the nation’s largest payment processors. It had been the third-largest processor in the prior year, but it cranked out 28% growth in the number of merchant transactions it processed last year, according to a recent Nilson Report. Vantiv jumped ahead of Bank of America, but it still trails front-running First Data.

Jefferies met with management recently and came away feeling the estimates have upside potential, organic growth in merchant services are accelerating, as are margins, and stock buybacks should resume in the not too distant future.

The Jefferies price objective is $49, and the consensus target is $47.15. Shares closed most recently at $45.96.

ALSO READ: Analyst Targets 3 Volkswagen Suppliers to Buy Now

While there are no guarantees that any of these companies beat the street, the Jefferies team are doing the math, and their work indicates that based on expectations it is entirely possible. Even with an inline quarter, these stocks are all solid additions to a growth portfolio.

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.