Well, last week was lousy, and perhaps some will be recouped this week as the market takes another swing at the upside. One thing’s for sure, the massive sell-off last week has put some outstanding growth stocks on sale, and investors with some dry powder may be able to buy stocks that have substantial upside potential for the rest of the year.
Jefferies is out with its first group of growth stocks to buy this year, and the list has not only some timely picks, but companies that have been knocked to levels that are providing some of the best entry points since last fall. We highlight five that investors should consider now, especially with the fourth-quarter earnings results right around the corner.
BioCryst Pharmaceuticals
This company is a potential takeout target. BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX) designs, optimizes and develops novel small molecule drugs that block key enzymes involved in rare diseases. BioCryst’s ongoing development programs include oral plasma kallikrein inhibitors for hereditary angioedema; avoralstat BCX7353 and other second generation compounds; and BCX4430, a broad-spectrum viral RNA polymerase inhibitor.
Jefferies notes the stock has been weak recently but feels the results of the next OPuS-2 results, which is the company’s clinical trial of BCX4161 in patients with hereditary angioedema, will show much better efficacy than the first clinical results. The firm also thinks there has been progress with the avoralstat formulation, which may enable twice a day dosing versus three times.
The Jefferies price target for the stock is $14. The Thomson/First Call consensus price target is $16.67. The shares closed Monday at $7.79.
[recirclink id=307986]
Cerner
This solid health care sector stock has good upside potential, and Jefferies thinks the growth potential is not appreciated. Cerner Corp. (NASDAQ: CERN) solutions assist clinicians in making care decisions and enable organizations to manage the health of populations. The company also offers an integrated clinical and financial system to help health care organizations manage revenue, as well as a wide range of services to support clients’ clinical, financial and operational needs.
Jefferies surveyed hospitals late last year and found that only about 25% have replaced their electronic health record or EHR systems. An EHR is a digital version of a patient’s paper chart, a real-time, patient-centered record that makes information available instantly and securely to authorized users. The analysts feel that quality vendors like Cerner will continue to take share in these replacements.
The company reported a third consecutive revenue miss back in November. On the bright side, the bookings were much stronger than expected. Jefferies reports that a record 39% of bookings were generated from new clients. While forward guidance also disappointed, it’s clear this is a work in progress and patient investors will be rewarded as PopHealth spending accelerates in 2016 and beyond.
The Jefferies price target is set at $78, and the consensus estimate is $70.34. The stock closed Monday at $57.26.
Hain Celestial
This one has great potential as the demand for organic food continues to grow. The Hain Celestial Group Inc. (NASDAQ: HAIN) manufactures, markets, distributes, and sells natural and organic products in approximately fifty countries worldwide. The company 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.
The analysts see the stock as one of the best growth stories in the industry, and it continues to be of the firm’s top ideas in the food sector. They cite the combination of solid long-term growth prospect combined with a solid exposure to the fast growing organic and non-GMO space. They also note that concern over slowing growth in the space is overblown, and short interest remains elevated at 11% of the float.
Jefferies has a $50 price target. The consensus target is higher at $56.89. The stock closed Monday at $36.42.
Jack in the Box
New items at this fast-food favorite could prove to be big this year. Jack in the Box Inc. (NASDAQ: JACK) has sold off over the past year, and the entry point here looks very solid. The company operates and franchises Jack in the Box restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. Through a wholly owned subsidiary, it also operates and franchises Qdoba Mexican Eats, a leader in fast-casual dining, with more than 600 restaurants in 47 states, the District of Columbia and Canada.
The company has posted positive comparison numbers on a regular basis over the past few quarters. Jefferies is bullish on sales initiatives like regular menu innovations and catering options, and marketing efforts are expected to keep up the sales momentum. Down over 25% since last August, the entry point looks very solid here.
Shareholders receive a 1.68% dividend. While the Jefferies price objective is $95, the consensus figure is $91.92. The stock closed most recently at $71.12.
NVIDIA
This top tech stock also reported outstanding earnings in November. NVIDIA Corp. (NASDAQ: NVDA) is one of the leaders when it comes to supplying graphics processing technology for the 3D graphics market, including desktop graphics processors and gaming consoles. NVIDIA is also moving into visual computing chips for cars, mobile devices and supercomputers. It has a technology partnership with electric car maker Tesla.
The company has been able to use its ability to leverage past investments, with a more controlled spending structure ahead on unified. That enables strong cash flow that is allowing a focus on capital return, which is currently estimated to be $1 billion next year.
The company posted earnings that were way ahead of estimates, and the first-quarter outlook implies earnings well ahead of current consensus. With gaming revenues up 44% year over year, the analysts believe there remains high overall Wall Street skepticism around NVIDIA, as most are unaware of the positive dynamics in the PC gaming and e-sports markets.
Some Wall Street analysts feel that virtual reality (VR) could see 10 million in annual shipments in three to five years, and NVIDIA will be a huge player. In fact, it’s possible that those shipments could represent as much as $750 million per year for the company and competitor AMD. Some on Wall Street have cited the large Technology Assessment Management System in gaming, autos, cloud enabled by NVIDIA’s graphics leadership
NVIDIA investors receive a 1.4% dividend. The Jefferies price objective is $38. The consensus target is $31.58. The stock closed Monday at $29.63.
[recirclink id=307970]
The Jefferies growth ideas make good sense for accounts that have a somewhat higher risk tolerance. At current pricing levels, they all offer investors an outstanding entry point.
Top Gaining Stocks
Top Losing Stocks