Jefferies Has 5 Red-Hot Momentum Stocks to Buy Now

By Lee Jackson Updated Jan 13, 2:34AM EST · Published Oct 11, 8:25AM EDT

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Jefferies Has 5 Red-Hot Momentum Stocks to Buy Now — © Coutesy of Yelp Inc.

[cnxvideo id=”625447″ placement=”ros”]One of the best market conditions for active traders is when price momentum underperforms and then kicks back in with a vengeance. Given what we have experienced since July, that could be a scenario we are about to enter. The market has been putting in a grinding, sideways move and may be getting ready for a jump higher, especially if earnings start to pick up.

A new research report from Jefferies focuses on a bounce-back for momentum stocks, and it notes that when price momentum has been as bad as it has been recently, it tends to rebound in a big way. The analysts screened the firm’s research universe and found 25 stocks rated Buy that, as they put it:

Sit in the top quintile based on our one-month change in 200-day moving average of price momentum, and carry a market cap above $2 billion inside of the Russell 2500 Growth

These five look especially attractive for traders.

Advanced Micro Devices

This chip stock has been on a roll, and some on Wall Street think the company is a buyout candidate. Advanced Micro Devices Inc. (NYSE: AMD) is one of the largest suppliers of PC microprocessors and graphics processors worldwide to computing original equipment manufacturers. The company’s main product lines include desktop, notebook and server processors and chipsets.

The company also offers microprocessors for server platforms under the AMD Opteron brand; embedded processor solutions for interactive digital signage, casino gaming and medical imaging under the AMD Opteron, AMD Athlon, AMD Sempron, AMD Geode, AMD R-Series and G-Series brands; and semi-custom System-on-Chip products that power the Sony PlayStation 4 and Microsoft Xbox One game consoles.

The Jefferies price target for the stock is $9, and the Wall Street consensus price objective is $6.12. The stock closed Monday at $6.84 per share.

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CyrusOne

This is a top pick among the data center stocks. CyrusOne Inc. (NASDAQ: CONE) designs, builds and operates facilities across the United States, Europe and Asia that give its customers the flexibility and scale to match their specific growth needs. Specializing in highly reliable enterprise-class, carrier-neutral data center properties, the company provides robust data center infrastructure to ensure the continued operation of IT equipment for a rapidly growing list of organizations that now nears 900, including nine of the Fortune 20 and more than 160 of the Fortune 1000 or equivalent-sized companies.

Many analysts feel that some of the best returns in the data center sector may be found in the smaller players in the space like CyrusOne. The company trades at numerous lower multiples than its bigger competition, and the Jefferies team feel that the discount valuation is not warranted given the recent surge in leasing and above-average growth. The company has also exhibited faster deployment times, rapid new market expansion and low churn among customers — all bullish reasons for buying the stock.

CyrusOne unitholders receive a 3.24% distribution. Jefferies has a $63 price target on the stock, and the consensus target is set at $60.18. The shares closed most recently at $46.95.

Jack in the Box

This is a top fast-food offering for traders to consider. Jack in the Box Inc. (NASDAQ: JACK) has sold off almost 10% since the end of September, 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. Additionally, through a wholly owned subsidiary, the company 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.

To counter McDonald’s all-day breakfast promotion, the company recently launched its new all-day “brunchfast” menu on September 28, 2016. The menu features items such as the bacon and egg chicken sandwich, the brunch burger and the southwest scrambler plate.

Shareholders are paid a 1.24% dividend. The Jefferies price target of $112 is above the $108.23 consensus target. Shares closed most recently at $96.45.

Take-Two Interactive Software

This top video game producer has cashed in with some super-hot titles. Take-Two Interactive Software (NASDAQ: TTWO) offers its products under labels such as Rockstar Games and 2K. It develops and publishes action/adventure products under the Grand Theft Auto brand, as well as other franchises, including Civilization, Borderlands, Bioshock and Red Dead under the Rockstar Games label. The Grand Theft Auto franchise has been one of the best-selling video games ever released.

The company also reported outstanding earnings for the recent quarter, but it did push guidance lower than current levels. Top Wall Street analysts are very bullish on the next Rockstar title, as well as the fact that the company raised its 2018 fiscal year estimates.

The Jefferies target price is $48, and the consensus target is at $46.38. The stock closed trading on Monday at $43.77.

Yelp

This is a top internet play for investors looking for exposure in the sector. Yelp Inc. (NASDAQ: YELP) provides free and paid business listing services to businesses of various sizes, as well as enabling businesses to deliver targeted search advertising to large local audiences through its website and mobile app.

Yelp also provides other services, including Yelp platform, which allows consumers to transact directly on Yelp; Yelp deals that allow local business owners to create promotional discounted deals for their products and services; and gift certificates products for local business owners to sell full-price gift certificates directly to customers. The Yelp platform also enables consumers to complete food delivery transactions, book spa and salon appointments, order flowers, make winery reservations and more.

The Jefferies price target is set at $42. The consensus posted target is much lower at $38.63, and shares closed above that level Monday at $41.11.

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These five solid companies could show some solid price momentum, especially with earnings season upon us. While they are more suited for accounts with a higher risk tolerance, they are all established companies with sizable track records.

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.