Diamond Member Pelican Press 0 Posted June 3, 2024 Diamond Member Share Posted June 3, 2024 Jefferies’ GARP picks with earnings momentum In a time of rate policy uncertainty and a solid economy, buying stocks that offer growth at a reasonable price could be a winning move for investors, according to Jefferies. The major averages are coming off of a winning May, with all three indexes notching fresh highs. The Dow Jones Industrial Average closed above the 40,000 mark for the first time in history, while the Nasdaq Composite topped the 17,000 level for the first time on record. Looking ahead, the best path forward for equity investors is to buy GARP stocks, or those that provide growth at a reasonable price. The GARP strategy combines aspects of growth and value investing. “In a year when market continues to oscillate between value and growth based on rate cut expectations, GARP has been the ultimate winner,” wrote Desh Peramunetilleke, global head of quantitative strategy at Jefferies. “With peaking rates favoring growth stocks while strong economic data is backing value, we advise traversing the middle path.” In a Friday research note, he shared a list of U.S. stocks that fall into the GARP strategy and possess strong earnings momentum. These stocks could offer investors sustainable outperformance over a longer time horizon, the analyst added. “Long-term investors should look beyond the deep-value cyclicals and extremely expensive growth stocks in favor of sustainable outperformance through stocks with both valuation and earnings support,” he wrote. Stocks included on the list had to meet the following criteria: Be a U.S. company with a market capitalization of at least $2 billion Be attractively valued on GARP, measured by having a price/earnings-to-growth ratio of less than 1.5x (the firm made a few exceptions here) Have strong earnings growth over the next two years, measured by having a compound annual growth rate, or CAGR, for earnings per share of at least 10% from 2024 and 2025. Stocks also had to have a positive CAGR for earnings in the last two years (a few exceptions were made here, as well) Have a positive 3-month earnings revision See below for a few stocks that made the cut. One name on the list was streaming giant This is the hidden content, please Sign In or Sign Up . The company’s stock has soared nearly 32% this year, while its price/earnings-to-growth ratio is 0.9. Last week, both Morgan Stanley and Evercore ISI reiterated their outperform ratings for the stock. “Continued strong net adds and top-line strength should alleviate concerns paid sharing is the primary driver of strength,” Morgan Stanley analyst Benjamin Swinburne wrote. Semiconductor darling Nvidia also fit the bill. The stock currently possesses a price/earnings-to-growth ratio of 0.6. Shares of Nvidia have led the current market rally with their surge of more than 120% in 2024. In May alone, Nvidia popped nearly 27% and surpassed $1,000 per share, powered by a fiscal first-quarter earnings and revenue beat . Daiwa analyst Louis Miscioscia last week hiked his price target on Nvidia to $1,325 from $900, suggesting more than 20% upside from Friday’s close. “Why is Nvidia the big winner?” he wrote. “Basically they have built what AI needs.” Those attributes include the chip giant’s developer support and its full stack solution. Clothing retailer Abercrombie & Fitch currently has a price/earnings-to-growth ratio of 1.2. The stock jumped 24% last Wednesday after Abercrombie posted its strongest first-quarter ever . Sales grew 22% compared with last year, and profits were almost seven times higher versus the year-ago *******. Shares of Abercrombie & Fitch are 95% higher in 2024. “We successfully navigated seasonal transitions with relevant assortments and compelling marketing, leveraging agile chase capabilities and inventory discipline, driving sales above our expectations,” CEO Fran Horowitz said in a news release . Other names on the list include Pinterest , Progressive and Texas Roadhouse . This is the hidden content, please Sign In or Sign Up Texas Roadhouse Inc,Progressive Corp,Pinterest Inc,Abercrombie & Fitch Co, This is the hidden content, please Sign In or Sign Up Inc,NASDAQ Composite,NVIDIA Corp,Dow Jones Industrial Average,Stock markets,Investment strategy,business news #Jefferies #GARP #picks #earnings #momentum This is the hidden content, please Sign In or Sign Up For verified travel tips and real support, visit: https://hopzone.eu/ 0 Quote Link to comment https://hopzone.eu/forums/topic/41962-jefferies%E2%80%99-garp-picks-with-earnings-momentum/ Share on other sites More sharing options...
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