Jefferies Out With Top Growth Stock Ideas With Big Implied Upside

More and more, the companies that we cover on Wall Street are starting to agree that while the future is still reasonably bright for the U.S. economy, it may be one of stock market gains that are much lower than the norm has been over the past 10 years. 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 stocks 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 four that look extremely good now.

Monster Beverage

The rage for energy drinks won’t be ending any time soon and this company is a leader. With more than $3 billion in sales, Monster Beverage Corp. (NASDAQ: MNST | MNST Price Prediction) is an alternate beverage company focusing primarily on the energy drink segment. Approximately 75% of sales are in the United States, and the company has two primary operating segments focused on finished goods and concentrates.

It’s important to remember though that Coca-Cola owns 16.7% of Monster Beverage, and the purchase back in 2015 made the Coke the company’s primary distributor in the United States and gave Monster access to the soft drinks giant’s distribution system in international markets. There always remains a possibility Coke could acquire the entire company as well.

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The stock has had some issues lately, and the analysts noted this:

We lowered Fiscal 2019-2021 earnings per share and are now slightly below consensus on much discussed US risk factors (Red Bull pricing, traction for Bang, etc.). Coke energy is expected to launch this Spring and our new survey suggests almost 30% would be likely to try the product. Also, satisfaction with Bang (a competitor to Monster) is high and people are two times as likely to view it as healthier.

The Jefferies price target for the shares is $65, though the Wall Street consensus target price is actually higher at $67.63. The stock closed trading on Monday at $53.28 per share.

Tesla

This has been one of the most talked about companies over the past two years, and the Jefferies team remains very positive on the shares. Tesla Inc. (NASDAQ: TSLA) manufactures and sells electric vehicles, particularly its high-end Model S and X, as well as the forthcoming mass-market-oriented Model 3.

Tesla also generates revenue from selling zero-emission vehicle credits to original equipment manufacturers, installing, operating and selling solar energy systems (previously SolarCity), and manufacturing and selling energy storage systems to customers.

The stock has been volatile, and CEO Elon Musk is unpredictable as well. However, the analysts remain positive and noted this:

While Tesla continues to lead towards increasingly affordable BEVs, it is too early in our view to gauge demand elasticity as pay-back from the end of federal credits is digested. We forecast near break-even in the first quarter with an EBIT loss of $50 million and free cash outflow in the $350-400 million range. That said, given Musk’s track record on guidance we see risk to the upside and believe negativity heading into the quarter is overdone. We forecast 52,000 M3 deliveries in the quarter.

The Jefferies price target remains at $450, well above the $328.32 consensus estimate of analysts. The shares ended Monday’s trading at $289.18 apiece.

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Varian Medical Systems

With a growing need for its services, this company has a very bright future. Varian Medical Systems Inc. (NYSE: VAR) is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy.

The company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center. Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer.

The analysts have remained positive on the shares for some time and noted this on the industry:

Findings from our survey support our bullish view on the Radiology-Oncology space with the general tone being that the outlook for procedure volumes and capital purchases in the US remains robust. When combined with pending purchase orders stemming from Class A/ B licenses recently issued in China the view on the space is one of a rising tide carrying all boats.

Jefferies has set a $145 price objective. The consensus target was last seen at $136.67, while the shares closed most recently at $141.59.

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Visa

This top credit card issuer is becoming a huge leader in digital pay and Jefferies remains very positive. Visa Inc. (NYSE: V) operates the world’s largest retail electronic payments network. The company provides processing services and payment product platforms, including consumer credit, debit, prepaid and commercial payments, that are offered under Visa and related brands. According to Nilson estimates, the company is the largest global credit network (as measured by volume) and the second largest global debit network.

Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products.

Visa remains very well liked across Wall Street as 77.9% of investment managers own its shares, and the analysts said this about the company:

We hosted meetings at Visa’s headquarters recently. Discussions were focused on the company’s business-to-business capabilities, cross border and Visa Direct. The company estimates the B2B opportunity is $120 trillion in size and that $20 trillion of that is more easily addressable (this is larger than nearly all of Visa’s global volume processed in 2018) and we are enthused about the B2B connect roll-out, expected to be introduced in the first quarter. We continue to believe Visa’s innovative capabilities and new product roll outs are underappreciated by the Street given the multiple disparity vs. MasterCard.

Visa shareholders are paid a small 0.64% dividend. The $175 Jefferies price target compares with the $161.33 posted consensus target. The stock was last seen trading at $157.26 a share.

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These four stocks all offer investors strength in their specific industries and the ability to avoid high-flying disasters. They are suitable for growth accounts with some degree of risk tolerance.