Though it may be a somewhat temporary phenomenon, one of Wall Street’s top chief economists, Aneta Markowska of Jefferies, sees the potential for the United States economy to experience the best growth in 40 years. She cites the combination of the coming pandemic stimulus, the reopening of the economy and a massive step-up in consumption.

Markowska sees a stunning 6.4% gross domestic product growth for 2021 and a follow-through in 2022 of 4.7%. All this of course as the government continues to pile on massive amounts of debt with a $1.9 trillion COVID-19 related stimulus and the potential for a huge $2 trillion national infrastructure rebuild in the near future.
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These estimates are extremely bullish, and Jefferies addressed the bold call by saying this in a recent research report:

In conjunction with additional fiscal stimulus, which is becoming increasingly a near term event, she believes this will create solid growth momentum at the start of the second quarter. Within her assumptions, Aneta forecasts the COVID vaccine to be widely available and administered to roughly half of the US population by the end of 2Q. This will set the stage for the second leg of reopening, this time driven by a return of high-contact activity. Given consumption remains well below pre-COVID levels for now, this is where she sees the strongest growth potential.

With the Jefferies macro team bullish on cyclical stocks going forward, they are out with 34 companies they feel will benefit the most from the seismic economic growth. We focus on five that offer solid value and big upside potential. It’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Analog Devices

This stock could very well continue to benefit from the increase in information technology and 5G spending. Analog Devices Inc. (NASDAQ: ADI) is a leader in the design, manufacture and marketing of analog, mixed-signal and digital signal-processing integrated circuits for use in industrial, automotive, consumer and communication markets worldwide.

The company offers signal-processing products that convert, condition and process real-world phenomena, such as temperature, pressure, sound, light, speed and motion, into electrical signals.

Analog Devices has among the best end-market exposure, with high communications and aerospace/defense market exposure, in addition to offering investors a powerful 5G content growth story. Plus, acquisitions over the past few years like Linear Technology and Hittite Microwave should provide revenue and additional cost synergies that are still coming.

Investors receive a 1.55% dividend. The Jefferies price target for the shares is $186. The Wall Street consensus target is just $164.02. Analog Devices stock closed Tuesday at $160.49 a share.

This company has had a public relations nightmare due to the 737 Max issues. Boeing Co. (NYSE: BA) is the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. It is also one of the most valuable brands in the world.
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The different segments in the company are Commercial Airplanes, Boeing Defense, Space & Security and Boeing Capital. The latter provides financial solutions facilitating sale and delivery of Boeing commercial and military aircraft, satellites and launch vehicles.

In 2018, Boeing and Embraer signed a nonbinding memorandum of understanding to create a new strategic partnership for commercial aviation. The new joint venture is valued at $4.75 billion, which values Boeing’s 80% share at $3.8 billion.

Jefferies has a $275 price target, while the consensus target is $229.59. Tuesday’s closing print for Boeing stock was $217.18 per share.

Deere

Equipment companies’ products certainly will be in demand, and this is a leader. Deere & Co. (NYSE: DE) is the largest manufacturer/distributor of agricultural equipment worldwide, with leading market shares in large farm-equipment segments.

Its Construction and Forestry segment, which should benefit the most from an infrastructure push, offers a range of machines and service parts used in construction, earthmoving, road building, material handling and timber harvesting, including backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; milling machines; recyclers; slipform pavers; surface miners; asphalt pavers; compactors; tandem and static rollers; mobile crushers and screens; mobile and stationary asphalt plants; log skidders; feller bunchers; log loaders; log forwarders; and log harvesters and related logging attachments.

Shareholders receive a 1.28% dividend. The $350 Jefferies price objective compares with a $321.76 consensus target price. Tuesday’s closing share price for Deere stock was $317.09.

This industry leader trades at a still reasonable 14.5 times estimated 2021 earnings. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $2.6 trillion in assets. The company as it is today was formed through the merger of retail bank Chase Manhattan and investment bank J.P. Morgan.
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The firm has many operating divisions, including investment and corporate banking, asset management, retail financial services, commercial banking, credit cards and financial transaction services.

Jefferies remains very positive on the money center and investment giant:

Industry titan that faces a broad recovery in nearly every aspect: 1) leading M&A advisory and capital markets product set and market share; 2) massive footprint of corporate and commercial banking customers; 3) sizable wholesale payments businesses. JPM has proven that it has the wherewithal to continually invest in people, products, and platforms to further its market share base, extending its competitive advantage vs. most peers.

JPMorgan stock investors receive a 2.49% dividend. Jefferies has set a $157 price objective. The consensus price target is $147.08, and shares closed most recently at $144.65.

Nvidia

This sector leader made a huge purchase last year that is proving to be a solid tailwind. Nvidia Corp. (NASDAQ: NVDA) rarely has grown through acquisitions, but it bought Mellanox and paid a whopping $6.9 billion in cash in a deal that closed back in April. In what actually was somewhat of a duel, Nvidia knocked out Intel in its bid to buy the chipmaker, and the deal has helped Nvidia boost its business of making data center chips that help power cloud computing.

Mellanox’s BlueField intelligent network adapters are another version of data center co-processing acceleration. Top Wall Street analysts see the combination of Nvidia and Mellanox as a definite threat to Intel’s data center CPU dominance of workloads.

Nvidia recently outlined a $100 billion total addressable market for its data center business by 2024, or twice the $50 billion outlined at its last investor day. The upside includes $20 billion from core Mellanox networking, $10 billion from new class of data processing units and another $10 billion from the emerging edge AI EGX computing platform.

Top analysts continue to believe the company’s exposure to some of the most exciting areas of growth in tech (gaming/esports, autonomous driving, artificial intelligence and server acceleration) will drive well above industry growth over the next few years.

Jefferies has a $680 price objective. The consensus figure is $596.59, but Nvidia stock closed at $613.21 on Tuesday.

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We stayed with stocks with the biggest market capitalizations and that are among the leaders in their specific fields. Note that the stock market is very overbought and could be poised for a 5% to 10% correction. With earnings season winding down, it may make sense to buy partial positions here and see if indeed we get a pullback.

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