Jefferies Adds 2 Very High-Profile Stocks to Franchise Picks List

By Lee Jackson Updated Jan 13, 10:01AM EST · Published May 2, 9:35AM EDT

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With most of the first-quarter results in and booked, many of the firms we cover on Wall Street are making some changes to the list of high-conviction stocks that they show to institutional and high net worth clients. This typically happens as the first quarter is often not only a snapshot of how the year started, but companies massage forward guidance, and that often is an indicator of how they expect the rest of the year to be.

In a series of new reports, Jefferies has added two high-profile stocks to the firm’s prestigious Franchise Picks list of high-conviction ideas. Both are well liked on Wall Street and could have outstanding upside potential for investors with a more aggressive posture.

Hain Celestial

This company is added to the list and 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 50 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. The analysts have noted in the past that concern over slowing growth in the space is overblown, and we checked short interest, which remains elevated at almost 11% of the float.
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The analysts feel the company’s total addressable market (TAM) has the potential to double over the next few years, and that private label products don’t pose a threat or an obstacle to continued solid growth.

The Jefferies price target for the stock is $50, and the Thomson/First Call consensus target is $48.32. The stock closed Friday at $41.86.

NXP Semiconductors

This company is considered a top play for investors looking for a chip stock with Internet of Things exposure. The NXP Semiconductors N.V. (NASDAQ: NXPI) merger with Freescale Semiconductor was widely applauded on Wall Street, and many analysts believe the merger is transforming the company into a powerhouse. It made NXP the fourth largest semiconductor company in the industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

NXP is getting its chips into high-growth areas such as contactless mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. Trading at solid discount to some of its peers, many analysts are very positive on the faster earnings growth potential relative to their competition. The company reports earnings after the close Monday.

The Jefferies team added NXP to the list as they see the company as having among the highest free cash flow per share in the sector for this year and 2017, a metric they feel is extremely critical in charting performance. They also see the potential for multiple expansion as capital reruns lift. Lastly, the analysts feel that we are heading into a supply chain restock this year, an obvious positive for sales.

The Jefferies price target is a whopping $130, and the consensus target is much lower at $107.88. The stock closed Friday at $85.28.
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With both stocks having solid upside potential to the Jefferies price targets, they make good sense for accounts looking to rotate capital. With the market on potentially shaky ground as we head into May, investors may want to buy partial positions and see if we don’t back up some.

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.