In a market where earnings growth is getting harder to find, many on Wall Street are quick to pull the trigger if an earnings report falls short or some other headline issues causes selling. The fact of the matter is that most solid growth companies occasionally will have a hiccup, and when they do the stock will get sold off for little or no reason. That’s the time for savvy investors to swoop in and accumulate shares.

Jefferies recent “Picturing the Week’s Opportunities” research piece focuses on large cap growth stocks that are very solid but have taken a hit either from earnings disappointment or an event-driven issue. All make good sense for growth stock investors looking for value, and all are rated Buy at Jefferies.

Acadia Healthcare

This company could have a revenue explosion over the next three years if the Jefferies team is right. Acadia Healthcare Co. Inc. (NASDAQ: ACHC) is a provider of in-patient behavioral health services. Acadia operates a network of 226 facilities with approximately 9,200 beds in 37 states, the United Kingdom and Puerto Rico. Acadia provides psychiatric and chemical dependency services to its patients in a variety of settings, including in-patient psychiatric hospitals, residential treatment centers, outpatient clinics and therapeutic school-based programs.

The company posted stellar earnings last year, and Jefferies thinks that its revenues can double in three years, owing to not only strong organic growth, but potential acquisitions. Also cited in the past was that analysts believe political support for expanded Medicaid coverage for adult mental health could grow the company’s addressable market by up to 30%.

Acadia reported strong results in February, with 8% same-store sales gains, and the analysts noted that while guidance was below expectations, they think the company is being extremely conservative, and there is a degree of currency headwinds to account for, in addition to a recent equity offering. They also noted that 40% of EBITDA is from the United Kingdom, and concerns over the country leaving the European union have also weighed on shares.

The Jefferies price target for the stock is $85, and the Thomson/First Call consensus target is $78.31. The stock closed Monday at $53.45.

Infinera

Some feel this top company would be an outstanding addition to a networking giant as a takeover candidate. Infinera Corp. (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations.

Infinera’s end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. Infinera’s unique large-scale photonic integrated circuits enable innovative optical networking solutions for the most demanding networks.

The analysts note that Alphabet’s recent announcement that it will be adding 12 new data center regions is a definite positive for Infinera. Trading at just 13.6 times EV/EBITDA with gross margins set at 46% and EBIT margin at 8%, the stock is cheap at current levels.

Jefferies has a $22.50 price target, and the consensus price objective is $22.23. Shares closed Monday at $15.24.
Nike

This stock was hit hard when a good earnings report came with guidance well below estimates. 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.

Wholly owned Nike subsidiaries include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. With 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 is benefiting from consumer preferences for “athleisure.” With its 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 Nike 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.

Jefferies cites spending on brand initiatives and some currency headwinds as contributing to the less than expected forward outlook. The firm cautions the stock could be weak for a while, but notes that futures were up 17% and the long-term prospects for the shoe and apparel giant remain positive.

Investors receive a 1.05% dividend. The $74 Jefferies price target is higher than the consensus target of $70.51. Nike closed at $61.34 on Monday.

PayPal

This company was spun-off from eBay last year, and many on Wall Street think the real growth is in the payment sector. PayPal Holdings Inc. (NASDAQ: PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide.

PayPal enables businesses of various sizes to accept payments from merchant websites, mobile devices and applications, as well as at offline retail locations through a range of payment solutions across company’s payments platform, including PayPal, PayPal Credit, Venmo and Braintree products. The company’s platform allows customers to pay and get paid, withdraw funds to their bank accounts and hold balances in their PayPal accounts in various currencies.

Jefferies thinks that solid revenue growth over the next five years is possible and the scarcity value, or lack of competition, could help drive the multiple for the company. Some Wall Street analysts have pointed to the new acquisitions PayPal has made, like Venmo and Paydiant, that are leveragable with the combination of Paydiant. Many also think that the eBay separation is likely to help the company’s positioning with large merchants.

Last week, reports circulated that Apple is looking to expand Apple Pay to in-browser on Touch ID devices. While this could be a headline risk for the company, analysts feel the competitive impact will be limited as merchant adoption could prove to be a challenge.

The Jefferies price target is $44. The consensus target is $41.47, and the shares closed Monday at $38.74.

All four of these solid growth companies are trading well below recent highs and the Jefferies price targets. While there could be some rough seas in the near term, the long-term prognosis for all four remains very positive.

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