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Red-Hot Gaming and Dating Stocks Highlight Jefferies Top Growth Picks
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More and more, the companies that we cover on Wall Street are starting to agree that while the future’s still bright for the U.S. economy, that future may be one of stock market gains that are much lower than the norm over the past decade. When that is the case, then investing strategies often shift from indexing to a more disciplined stock-picking routine, and that’s when investors need solid growth ideas.
Jefferies highlights the firm’s top growth stocks to buy each week, and this week is no exception. While these companies are better suited for accounts that have a higher risk tolerance, they all make good sense now and all have outstanding upside potential. We found three that look extremely good now.
This is a top pick on Wall Street and Jefferies remains very positive on the shares. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. The company develops and publishes interactive entertainment software products through retail channels or digital downloads and downloadable content to a range of gamers.
The Jefferies analysts didn’t expect any big announcements from Activision at the recent E3 gaming trade show, but they are very bullish on the holiday selling season and noted this in the report:
With its new Blackout mode, we think Black Ops 4 looks like the most exciting Call of Duty in years, and despite a full holiday slate, we think Black Ops 4 looks like the surest big hit. Fortnite was less of a topic of discussion than we were expecting, but we note that Epic’s mega-hit certainly has had an impact on game design. Streaming, subscriptions and expanding the addressable market were key focuses as well at E3.
Shareholders receive just a 0.51% dividend. The Jefferies price target for the shares is $86, and the Wall Street consensus target is $75.88. The stock traded early Tuesday at $76.90.
Jefferies has been back and forth on this stock but once again has raised it to Buy. Match Group Inc. (NASDAQ: MTCH) is the worldwide leader in online dating products in terms of revenue, monthly active users and paid members. Its portfolio of dating sites includes several of the most popular products: Match, Meetic, OKCupid, Tinder, POF and Twoo. It has four of the top-five highest-grossing dating apps in North America and three of the top five worldwide.
With more and more millennials turning to online dating, the prospects for this company are incredibly strong. Toss in the computer literacy of younger Americans, and it makes sense that the stocks in this area would show robust growth. Some top Wall Street analysts feel that as much as a stunning 50% of all dates will begin online by 2022.
The analysts said this in the report:
We downgraded the stock in May based on a lack of clarity around Facebooks dating product; however, our latest checks suggest minimal long term impact to the stock. Our survey of 600 online daters informs us that many users do not wish to commingle dating with social media and Facebook’s product will likely appeal to a younger age demographic than Tinder. In addition, certain new Facebook product features have had minimal impact on competition in the past. We forecast 26% rev growth in 2018 versus 19% in 2017 and 40%+ long term EBITDA margins.
Jefferies has a $50 price target, and the consensus target is $43. The stock was last seen at $42.80 a share.
This real up-and-comer in the exchange traded fund business has many specialized offerings. Wisdom Tree Investment Inc. (NASDAQ: WETF) currently has over $30 billion in assets under management (AUM) and continues to benefit from the movement towards ETFs. This is especially true with the specialized currency hedged products, with the potential for significant uptake in interest rate hedged products.
The company has developed proprietary indices rather than tracking third-party ones. Its product offerings of specialized ETFs, many of which are active or rules-based, generate higher fees than most ETFs. More than two-thirds of the company’s AUM have international investing objectives.
Like many on Wall Street, Jefferies sees the company as a potential takeover target and its research report said this:
We spent time with management last week. While the hedged products will likely remain a headwind to near-term flows, commentary from management indicates flows across the remaining products are solid. The TD Ameritrade partnership that was announced in in the third quarter of last year has been a significant positive and management remains confident it its ability to secure additional relationships to expand its distribution footprint. Since the third quarter of 2017 the number of funds inflowing increased from 28 to 51 in the first quarter of 2018. We continue to see potential for WisdomTree to be acquired in the next 3 years, especially in light of recent industry mergers and acquisitions.
Shareholders are paid a 1.1% dividend. The $13 Jefferies price target compares with the $11.07 consensus target and the recent $10.90 share price.
These three solid growth stock picks from the analysts at Jefferies are very solid players in their respective sectors and offer investors reasonable valuation and good upside potential.
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