The market rallied last week when the Federal Reserve finally raised rates and then we gave it all back on Thursday and Friday. Despite the wicked selling, a number of indicators suggest we could be ready for a nice year-end rally to finish out 2016.
In a new research report, the top-notch head of U.S. Product Management at Jefferies, T.J. Thornton, who is often spot on when it comes to indicator calls, noted that in addition to the dreadful advance/decline numbers and the inverted volatility (VIX) curve, the market also recorded the lowest American Association of Individual Investors reading since late July, and the highest ARMS reading since September. Both, in tandem with the prior week’s reading, suggest an oversold rally could be on the way.
We screened this week’s top growth stocks picks at Jefferies and found four that could climb sharply if an end-of-year Santa Claus rally does indeed come. All of course, are rated Buy.
Hain Celestial
This company has great potential as the demand for organic foods continue to grow. Hain Celestial Group Inc. (NASDAQ: HAIN) manufactures, markets, distributes and sells natural and organic products in approximately 50 countries worldwide. It has a plethora of very well-known brands that are extremely popular with consumers, and many on Wall Street feel that strategic investments, combined with continued efforts to contain costs, increase productivity and enhance cash flows and margins, will enable solid earnings results to continue.
Jefferies initiated coverage with a Buy rating and sees the stock as one of the best growth stories in the industry. It continues to be one of the firm’s top ideas in the food sector. Jefferies cites the combination of solid long-term growth prospect combined with a solid exposure to the fast growing organic and non-GMO space. Concern over slowing growth in the space is overblown, notes Jefferies, though short interest remains elevated at 11% of the float.
The Jefferies price target for the stock is $50. The Thomson/First Call consensus price target is $66.59. The stock closed Friday at $40.55.
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Nike
This stock has had an outstanding year so far, still up a sizzling 35%. Nike Inc. (NYSE: NKE) is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Subsidiaries include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, as well as Hurley International, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. Given Nike is 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 benefits from consumer preferences for “athleisure.” With the company’s extensive product line and recognizable worldwide branding, the stock continues to roll year-after-year. Driven by its digital business, as well as inline and factory stores, Nike now anticipates achieving $16 billion in revenue by the end of fiscal year 2020. Over the next five years incremental growth in its Brand Direct to Consumer (DTC) revenues is expected to be driven by e-commerce sales, which are projected to grow to $7 billion. The company also expects to drive wholesale growth in the mid-to-high single-digit range over the next five years.
Investors receive a 1% dividend from the sporting apparel giant. Jefferies has a $150 price target, compared to the consensus target of $142.86. Nike closed at $128.56 on Friday.
Rubicon Project
This top ad tech company could have outstanding potential for more aggressive growth accounts. Rubicon Project Inc. (NASDAQ: RUBI) pioneered advertising automation technology to enable the world’s leading brands, content creators and application developers to trade and protect trillions of advertising requests each month and to improve the advertising experiences of consumers.
Jefferies notes that there has been a groundswell of negativity around the ad technology stocks, but the analysts feel that Rubicon has separated itself from the competition by providing a programmatic marketplace for ad buyers and sellers. They also feel the stock is very solid play on the continued shift online, the shift to programmatic and a share gainer.
Jefferies initiated it with a Buy rating and a $24 price target. The consensus target is $24.20. The stock closed on Friday at $15.94.
WhiteWave Foods
This very under-the-radar company may have big potential for investors. WhiteWave Foods Co. (NYSE: WWAV) is a leading consumer packaged food and beverage company that manufactures, markets, distributes and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products and organic produce throughout North America and Europe.
In the consumer packaged goods space, Jefferies feels that WhiteWave is among the best, with solid growth prospects and a big pullback in the stock’s price this year as two compelling reasons for investors to own shares. Trading below the historical multiple at only 1.4 times price-to-earnings growth, the value is there.
The Jefferies price target is $44, but the consensus target is much higher at $51.23. The stock closed Friday at $37.89.
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While there is no guarantee at all the market will rally before the end of the year, with very few trading days left, portfolio managers will want to stuff their portfolios with winners, and that could drive the markets higher.
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