With the holidays right around the corner, and the 2015 trading year just about finished, many investors are taking the opportunity to review their current portfolio holdings and make end of the year changes. With the likelihood of single-digit gains perhaps being not the exception but the rule for the foreseeable future, investors should be looking for true growth stocks with long-term upside potential.
A new Jefferies research report features some solid new growth stock calls that make good sense for people not only looking to add some alpha to their portfolios, but also looking to perhaps replace stocks that underperformed this past year. We found four that look outstanding, and all four are rated Buy.
Amazon
This absolute leader in online retail and dominate player in cloud storage business just crushed earnings this past quarter. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites, which primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. In addition, the company serves developers and enterprises through Amazon Web Services (AWS), which provides compute, storage, database, analytics, applications and deployment services that enable virtually various businesses.
Jefferies notes that the company had outstanding unit and revenue growth, and it also cites that the online retail giant’s fulfillment advantage over peers may end up being one of the most significant silos in the company’s overall business structure.
Furthermore, holiday spending data suggests that desktop online sales grew but rates slowed from last year, with mobile significantly outgrowing desktop. Jefferies cited Channel Advisor data that noted that Amazon’s showed an outstanding 21% growth rate on Black Friday this year.
The Jefferies price target is a gigantic $775. The Thomson/First Call consensus price target is $730.76. The stock closed Monday at $672.64.
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Acadia Healthcare
This company could have a revenue explosion over the next three years, if Jefferies is right. Acadia Healthcare Co. Inc. (NASDAQ: ACHC) is a provider of inpatient behavioral health services. Acadia operates a network of 226 behavioral health facilities, with approximately 9,200 beds in 37 states, in the United Kingdom and Puerto Rico. It provides psychiatric and chemical dependency services to its patients in a variety of settings, including inpatient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs.
Acadia has posted stellar earnings this year, and Jefferies thinks that revenues at the company can double in three years owing to not only strong organic growth, but potential acquisitions. The firm also cited that Speaker of the U.S. House of Representatives Paul Ryan recently expressed support for the bill that seeks to expand Medicaid coverage for adult mental health, something that the analysts believe could grow the company’s addressable market by up to 30%.
Jefferies has a $100 price target, and the consensus estimate is $89.13. The stock closed Monday at $67.62.
Celgene
This large cap stock is one of Jefferies’ top biotech picks for its solid upside potential for 2016. Celgene Corp. (NASDAQ: CELG) has an outstanding partnered pipeline that most think is low risk and has the potential to yield several blockbuster drugs. Certain Wall Street analysts also think the company can grow earnings 15% on a compounded annual growth rate basis going forward.
Celgene provided strong guidance earlier this year on its Otezla launch and encouraging feedback from doctors on the potential of new triplet regimens in myeloma. Analysts across Wall Street raised their estimates for the drug as, after a little more than a year on the market, Otezla, which treats psoriasis and psoriatic arthritis, has achieved considerable prescriptions among physicians.
The company’s blockbuster blood cancer drug Revlimid continues to dominate. Pomalyst sales also continue to be solid. Cancer drug Abraxane is growing at a respectable rate as well, so the company continues to have a strong lineup of top-selling drugs. While third-quarter numbers were pretty much just in line, the fourth quarter and 2016 could prove to be better.
The $141 Jefferies price target is lower than the consensus target of $145. The shares closed Monday at $110.43.
Insys Therapeutics
The target of a recent short-selling report, this stock dropped almost 20%. Insys Therapeutics Inc. (NASDAQ: INSY) is a specialty pharmaceutical company that develops and commercializes innovative drugs and novel drug delivery systems of therapeutic molecules that improve the quality of life of patients. Using proprietary sublingual spray technology and capabilities to develop pharmaceutical cannabinoids, Insys addresses the clinical shortcomings of existing commercial products.
Insys currently markets two products: Subsys, which is sublingual fentanyl spray for breakthrough cancer pain, and a generic version of Dronabinol (THC) capsules.
Jefferies notes that the company called an investors meeting after the short report hit, and the analysts came away feeling that investors are essentially receiving a free call option on the company’s drug pipeline after the damage inflicted by the report. They also cite Syndros and Naloxone for opioid overdose as solid opportunities for the company.
The Jefferies price target is $36, and the consensus target is much higher at $46. The stock close Monday at $26.80.
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Jefferies is taking advantage of both market dislocation and some positive data with these top growth stocks to buy. It should be noted that these are far better suited for aggressive growth accounts that can handle a degree of volatility.
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