With 2017 winding down, everybody is looking toward the holiday, and investors are looking into 2018. After years of a long, secular bull market, valuations are stretched, and the only thing that will push stocks higher are earnings. With most of the companies we cover here at 24/7 Wall St. starting to release the top picks for 2018, we combed through the high conviction stocks picks looking for companies poised to have big 2018 earnings.
We screened the current stocks in Stifel’s Select List of top picks for technology companies that had big earnings estimates for 2018 and found five that look like they could shoot the lights out next year. Of course, all are rated Buy, but most are better suited for aggressive growth accounts with a pretty high risk tolerance.
Varonis Systems
While not a pure-play security stock, this is a big potential winner in the overall sector. Varonis Systems Inc. (NASDAQ: VRNS) is a leading provider of software solutions that protect data from insider threats and cyberattacks.
Through an innovative software platform, Varonis allows organizations to analyze, secure, manage and migrate their volumes of unstructured data. Varonis specializes in file and email systems that store valuable spreadsheets, word processing documents, presentations, audio and video files, emails and text. This rapidly growing data often contains an enterprise’s financial information, product plans, strategic initiatives, intellectual property, and confidential employee, customer or patient records.
IT and business personnel deploy Varonis software for a variety of use cases, including data security, governance and compliance, user behavior analytics, archiving, search and file synchronization and sharing. Stifel feels 2018 estimated earnings per share (EPS) growth could be up huge 70.6%.
The Stifel price target is $52, and the Wall Street consensus target is $51.27. Shares were last seen trading at $48.65.
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Tech Data
This company has been on a roll recently, and 2018 looks to be more of the same. Tech Data Corp. (NASDAQ: TECD) is an international wholesale distributor of information technology products and related services with product sales accounting for 90% of its revenue.
The company has 115,000 customers, including value-added resellers, corporate resellers, direct marketers and retailers spread across 100 countries in the Americas and Europe. Tech Data sells over 125,000 products from over 1,000 manufacturers. Stifel sees 2018 estimated EPS up a huge 42.1%.
Stifel has a $110 price target, and the consensus figure sits at $113.43. Shares traded Friday morning at $95.60.
Mellanox Technologies
This small cap company may be poised for a very strong 2018. Mellanox Technologies Ltd. (NASDAQ: MLNX) is a fabless semiconductor company. It is an integrated supplier of interconnect products and solutions based on the InfiniBand and Ethernet standards.
Mellanox Technologies operates in the development, manufacturing, marketing and sales of interconnect products that facilitate data transmission between servers, storage systems, communications infrastructure equipment and other embedded systems. It operates its business globally and offers products to customers at various levels of integration. The analysts estimate 2018 EPS growth of an outstanding 41.8%.
The Stifel price objective was recently raised to $70 from $53. The consensus target is $55.60, but shares were trading at $62.45.
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Salesforce.com
This top company reported solid fiscal 2018 second-quarter results as billings drastically improved. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.
It offers enterprise cloud computing applications and platform services, including Sales Cloud that enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.
The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices; and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.
The company’s guidance for revenues of $20 billion to $22 billion (17% to 21% compounded annual growth rate) in fiscal 2022 is consistent with top analysts’ long-term framework and has upside. Many see battle lines emerging given the Salesforce-Google partnership versus Adobe and Microsoft, as digitization becomes a pronounced theme. Stifel sees EPS growth of 31%
Stifel has a $120 price target, but that compares with the consensus target of $121.76. The shares recently traded at $104.15.
Adobe Systems
This high-profile old-school software company has been posting outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.
Adobe is also reasonably safe route for investors looking to own a company with marketing automation product, which has become huge. Adobe also a partnership with Microsoft, which Jefferies feels is expanding, and it also has Facebook and Google as partners in the ad cloud.
Top Wall Street analysts see the company benefiting from artificial intelligence, predictive analytics, automation bots, speech recognition and natural language processing and image recognition. Stifel sees EPS increasing a solid 30.6%.
Stifel has a $200 price target, and the consensus target is $184.67. Shares were last seen at $175.40
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Five outstanding companies that all look poised to follow up a stellar 2017 with another good year in 2018. While the estimates could always change, they look good for now, and that is a big positive for shareholders.
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