Buy these 13 stocks that are set to crush expectations and rally after their earnings, Jefferies says — including a top pick that could surge 79%

  • Earnings are picking up just as COVID-19 cases increase again and market volatility rises ahead of the US presidential elections.
  • Analysts from Jefferies are naming a group of "Buy"-rated companies that they think will beat expectations and set up longer-term gains.
  • The firm thinks most of the picks have upside of 20% or more in the next year.
  • Visit Business Insider's homepage for more stories.

With the election coming and COVID-19 cases rising, if ever there were a time that earnings season looked like it might be a pleasant distraction, this is that time.

But some companies and investors are going to have a much better time than others. To that end, a group of 11 analysts from Jefferies Group are pointing out a slate of companies that they believe will beat expectations this season and be rewarded for strong results, a positive outlook, or both.

And it comes at a time when investors might be that much more desperate for good news.

The group of stocks spans the market in terms of sectors and size, with the smallest worth well under $1 billion and the largest tipping the scales at $140 billion.

All are "Buy"-rated by the firm, and in most cases, the Jefferies analysts expect the companies' earnings to beat Wall Street expectations — although in a few instances their optimism is connected more to other metrics or company guidance.

They're bullish on all 13 companies over the longer term, and the firm's price targets imply substantial upside. The stocks are arranged from lowest to highest based on the gain that's being projected by Jefferies' current 12-month targets.

Upside and price figures are based on Thursday's closing prices.

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13. AMN Healthcare Services

Ticker: AMN

Sector: Healthcare

Market cap: $3.0 billion

The reason: "We believe Q4 earnings guidance will be above Street and will push the stock higher. In addition, elevated COVID-driven demand for temp nurse staffing persists and should carry over into 1Q21."

Price target: $65

Upside to target: 1.0%

Source: Jefferies

12. Surgery Partners

Ticker: SGRY

Sector: Healthcare

Market cap: $1.1 billion

The reason: "We are bullish on SGRY heading into the Q3 print given our view that revenue trends continue to accelerate, driven by the rebound in ASC (ambulatory surgery center) demand, share gains from hospitals, and more importantly, the company-specific acceleration in joint replacement surgery growth."

Price target: $23

Upside to target: 3.4%

Source: Jefferies

11. ON Semiconductor

Ticker: ON

Sector: Information technology

Market cap: $10.1 billion

The reason: "We expect outperformance in its Auto Business, and we think the Street is underestimating ON Auto revs by $100m in 2H21."

Price target: $27

Upside to target: 7.2%

Source: Jefferies

10. Deckers Outdoor

Ticker: DECK

Sector: Consumer discretionary

Market cap: $7.0 billion

The reason: "Traffic to UGG.com rose by nearly 40% in F'2Q, accelerating from F'1Q, when UGG registered triple-digit e-comm growth. We also see signs of overall improving brand momentum, esp. with younger consumers."

Price target: $300

Upside to target: 16.4%

Source: Jefferies

9. Broadcom

Ticker: AVGO

Sector: Information technology

Market cap: $140.4 billion

The reason: "We recommend AVGO as our top idea heading into earnings and see 3 catalysts for the stock in 2H20. They include: our expectation for the company to increase its dividend by 10-15% in Dec; content increase in the iPhone and data center spend to drive revenue upside … higher capital return and P/E expansion."

Price target: $420

Upside to target: 19.5%

Source: Jefferies

8. Republic Services

Ticker: RSG

Sector: Industrials

Market cap: $27.6 billion

The reason: "RSG showed the largest improvement in our commercial waste survey … of respondents that reduced or discontinued service asking for service increases. We believe this bodes well for RSG into its Q3 print around better operating leverage."

Price target: $110

Upside to target: 25.9%

Source: Jefferies

7. Cloudflare

Ticker: NET

Sector: Information technology

Market cap: $16.7 billion

The reason: "3Q Street rev estimates for $103.1M in 3Q and full year estimates for $406.5M in 2020 both feel conservative given it implies significant deceleration vs the 48% growth in both 1Q and 2Q, coupled with strong future business tailwind."

Price target: $70

Upside to target: 29.6%

Source: Jefferies

6. Church & Dwight

Ticker: CHD

Sector: Consumer staples

Market cap: $21.8 billion

The reason: "The company continues to benefit from elevated demand for COVID-19 "mega-trends". … with strong demand in the US as well as a conservative GM guide which are both sources of potential upside."

Price target: $114

Upside to target: 30.9%

Source: Jefferies

5. RingCentral

Ticker: RNG

Sector: Information technology

Market cap: $23.9 billion

The reason: "We expect another strong beat and raise quarter … guidance implies 23% y/y total rev growth and 25% sub rev growth. Mgmt's guidance factored in macro uncertainty, but we believe results will ultimately prove this to be conservative."

Price target: $370

Upside to target: 39.1%

Source: Jefferies

4. Beacon Roofing Supply

Ticker: BECN

Sector: Industrials

Market cap: $2.2 billion

The reason: "We are above consensus for FY21 after raising estimates to reflect strong demand and upside on GMs. Despite the toughest resi comp of the year, we are modeling a positive inflection in the residential segment this quarter."

Price target: $44

Upside to target: 39.4%

Source: Jefferies

3. Extended Stay America

Ticker: STAY

Sector: Consumer discretionary

Market cap: $1.9 billion

The reason: "We highlight STAY as a beneficiary of transient demand, and we believe it is one of the few hotel companies within our coverage that we expect to generate higher YoY occupancy in 2H."

Price target: $16

Upside to target: 42.1%

Source: Jefferies

2. Keurig Dr Pepper

Ticker: KDP

Sector: Consumer staples

Market cap: $39 billion

The reason: "Strength in cold beverages/AH (at home) coffee offsets AFH (away from home) headwinds in the quarter. … higher HH penetration and attachment rates in Coffee should drive sustainably higher growth and multiple expansion for KDP shares."

Price target: $40

Upside to target: 47.1%

Source: Jefferies

1. Golar LNG

Ticker: GLNG

Sector: Energy

Market cap: $732 million

The reason: "We believe that winter inventory building in Japan, South Korea, and China will drive increased LNG (liquid natural gas) export activity during 4Q20, resulting in our increased rate assumptions and EBITDA estimates."

Price target: $15

Upside to target: 78.6%

Source: Jefferies

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