Investing
Jefferies Out With Top Small Cap Growth Picks for 2019
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It’s that time of year again, the time when all the top firms that we cover here at 24/7 Wall St. start to make their stock picks and prognostications for 2019. This not only gives investors a bit of a head start on year-end portfolio reshuffling, but it also gives them a look at what the overall macro thoughts for the coming year are at the big brokerages and banks.
The relentless selling in the markets that started in early October has shaken the faith of many investors, despite the big rally on Wednesday, but it remains important to remember that we have enjoyed an almost 10-year bull market run, with the S&P 500 running to 2,940 from an intraday low in March of 2009 of 666. This current backup should give investors a chance with some dry powder to reset and buy some great companies.
In a new Jefferies research report, the firm’s top flight equity strategist, Steven DeSanctis, is out with 19 ideas for 2019 that screen extremely well. Here’s what the report outlined:
Steven remains more positive than most of the clients he has spoken with, though he thinks a first quarter reporting season rebound is the most likely near term rally. Steven highlighted that revision trends have stopped declining and have finally started to reverse and turn up. Steven reiterated his preference for Growth over Value stocks going forward and screened the Russell 3000 for Buy-rated stocks between $2 billion and $30 billion market cap that are expected to see double-digit revenue growth over the next 2 years and have return on equity of>10%, debt to capital of <50% and foreign sales less than 25%.
Of the 19 top picks in the report, five are highlighted as top selections, and all are rated Buy at Jefferies.
Abiomed
Many on Wall Street feel this top company has virtually no competition in its space. Abiomed Inc. (NASDAQ: ABMD) engages in the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. It also provides continuum of care to heart failure patients.
The company offers Impella 2.5 catheter, a percutaneous micro heart pump with integrated motor and sensors for use in interventional cardiology; Impella CP that provides partial circulatory support using an extracorporeal bypass control unit; Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite; and Impella RP, a percutaneous catheter-based axial flow pump.
The Jefferies price target for the shares is $460, and the consensus target is $446.10. The stock closed Wednesday at $307.44.
Diamondback Energy
This top Permian Basin play for more aggressive accounts was absolutely eviscerated in the sell-off. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, and focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.
Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.
Wall Street analysts have noted in the past the company’s top-tier asset base, solid accretive additions and financial discipline, which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target. Diamondback continues to drill some of the most economical wells in the United States as efficiencies improve, costs decrease and activity remains in the better regions.
Jefferies has a price target of $158, and the consensus target is $153.27. The shares closed Wednesday at $91.99.
Green Dot
This smaller cap company is somewhat off the radar but offers solid growth potential. Green Dot Corp. (NYSE: GDOT) is a pro-consumer bank holding company and financial technology innovator that engages in the provision of prepaid cards, debit cards, checking accounts, secured credit cards, payroll debit cards, consumer cash processing services, wage disbursements and tax refund processing services.
The company operates through Account Services and Processing and Settlement Services segments. The former segment offers deposit account programs that can be acquired through omnichannel distribution platform. The latter segment comprises products and services that all specialize in facilitating the movement of funds on behalf of consumers and businesses.
Jefferies has a $100 price target. The consensus price target is $94.69, and the stock closed trading on Wednesday at $75.74.
Trade Desk
This stock had a red-hot initial public offering in 2016 and has been steadily moving higher over the past two years, but the recent sell-off offers aggressive accounts an outstanding entry point. The Trade Desk Inc. (NASDAQ: TTD) provides a self-service omnichannel software platform that enables clients to purchase and manage data-driven digital advertising campaigns in the United States and internationally.
The company’s platform allows clients to manage integrated advertising campaigns in various advertising channels and formats, including connected TV, mobile, video, audio, display, social, and native on various devices, such as smart TVs, computers, and mobile phones and tablets.
The $150 Jefferies price objective compares to the $131.47 consensus target and the most recent close at $110.81 a share.
24/7 Wall St.Ulta Beauty
If there is any stock to own in the discretionary sector, this may be the one. Ulta Salon Beauty Inc. (NASDAQ: ULTA) is a holding company for the Ulta Beauty group of companies. It is a beauty retailer that offers cosmetics, fragrance, skin care, hair care products and salon services. The company offers approximately 20,000 products from over 500 beauty brands across all categories, including its own private label. Ulta Beauty also offers a full-service salon in every store featuring hair, skin and brow services.
Ulta Beauty operates approximately 970 retail stores across over 48 states and the District of Columbia and also distributes its products through its website, which includes a collection of tips, tutorials and social content. The company offers makeup products, such as foundation, face powder, concealer, color correcting, face primer, blush, bronzer, contouring, highlighter, setting spray, shampoos, conditioners, hair styling products, hair styling tools and perfumes.
Jefferies has set its price target at $335. The consensus price objective is $318.95, and the shares closed Wednesday at $242.20.
These five outstanding stock picks from Jefferies all have solid upside to the firm’s price targets. While better suited for more aggressive growth accounts, they all look like good picks for 2019 and beyond.
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