Online financial services provider Enova International Inc. has the most upside potential of stocks included in Stephens’ list of best ideas for 2019, with a stock price target that is 131% above its current trading level.
Stephens has been compiling the list for 14 years based on its 30 analysts’ top picks to outperform their sector peers, as well as the Russell 2000
RUT, +0.52%
and overall markets. In 2018, its best ideas list generated a negative return of 14.7% (calculated from Jan. 2, 2018 to Dec. 26), compared with a negative 13.1% for the Russell 2000. The worst performers were online lender Curo Group Holding Corp.
CURO, +3.90%
which ended the year down 55%, and furniture store chain Conn’s Inc.
CONN, +4.24%
down about 47%. The S&P 500
SPX, -0.30%
fell 7% in 2018.
The Chicago-based Enova
ENVA, +3.55%
which offers consumer loans, lines of credit and installment loans to borrowers in the U.S., Canada, U.K., Australia, Brazil and China, is expected to continue “at the disciplined pace of growth” it has enjoyed since 2017, according to Stephens analyst Vincent Caintic.
Management offered strong per-share earnings guidance for 2019 on the company’s fourth-quarter earnings call and said it expects to grow by signing up more banks as partners. Stephens is expecting key drivers will be consumers; a dual focus on meaningful growth that has a real impact on the bottom line; and a steady mix of originations from existing customers that should drive marketing efficiencies.
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Stephen’s has a $45 stock price target for Enova, compared with its year-end close of $19.46.
Oklahoma-based Continental Resources Inc.
CLR, +3.88%
has the second most upside potential of stocks on the list with a stock price target that is 119% above its current price. Analyst Drew Lipke is expecting the company to benefit from its Project Springboard multiyear oil development program, which should boost free cash flow and return on capital employed.
Lipke is expecting the company to deliver 22% organic oil production growth in 2019, followed by 15% growth in 2020 as it targets Oklahoma’s STACK and SCOOP.
STACK is a geographic area known by the acronym that stands for Sooner Trend Anadarko Canadian and Kingfisher counties. SCOOP stands for South Central Oklahoma Oil Province, and is mostly located in the state’s Anadarko Basin. The analyst has a target price of $88, which compares with the stock’s 2018 close of $40.19.
In third place is Noble Energy Inc.
NBL, +1.33%
a Houston, Tx-based exploration and production company operating in North America, the Eastern Mediterranean and West Africa. Analyst Gail Nicholson has a $40 stock price target, more than double its 2018 close of $18.76.
The company “has solid multi-faceted U.S. operations (Permian, DJ Basin and Eagle Ford) and a substantial free cash flow generating long life Eastern Mediterranean asset base (first production Leviathan expected YE19),” the analyst wrote. Leviathan is Noble’s Mediterranean Sea gas field offshore Israel. Once production starts, Nicholson is expecting Noble to generate significant free cash flow of more than $1 billion in 2020 assuming $65 oil, and expected return on capital employed to improve.
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“We anticipate NBL utilizes its positive cash flow generation to further enhance shareholder value by increasing the dividend (currently pays an $0.11 quarterly cash dividend) and/or a share repurchase program,” said the analyst. Noble currently has a $750 million share buyback authorization of which about $232 million had been used by end September, she said.
In the restaurant sector, Grubhub Inc.
GRUB, -1.63%
is top pick with a stock price target that is 102% above its year-end closing price. The stock was first added to Stephens’ list after a selloff following the third quarter.
“We continue to support the company’s decision for additional investment in acquiring diners at accelerating ROIs (return on investment), which we believe will likely lead to further upside in FY19 revenue growth and greater earnings power over time,” analyst Will Slabaugh wrote. “ We also felt 3Q18 demonstrated that 1) organic demand continues to accelerate, demonstrating the health of the end-market, and 2) the additional ad-spend in 3Q (leading to the EBITDA miss) translated into clear top-line benefits, which we expect to occur on a larger scale in 4Q18/2019.”
Here is the full list of Stephens’ top picks for 2019: Six of its analysts selected cash as their top pick and are not included here.
| Ticker | Company name | Price 12/31/2019 | Price target | Percentage difference |
| LSTR | Landstar System Inc. | $95.67 | $139.00 | 45% |
| ENVA | Enova International Inc. | $19.46 | $45.00 | 131% |
| RP | RealPage Inc. | $48.19 | $70.00 | 45% |
| FMC | FMC Corp. | $73.96 | $100.00 | 35% |
| AVNS | Avanos Medical Inc. | $44.79 | $68.00 | 52% |
| KNX | Knight-Swift Transportation Holdings Inc. | $25.07 | $50.00 | 99% |
| CBS | CBS Corp. | $43.72 | $58.00 | 33% |
| VMC | Vulcan Materials Co. | $98.80 | $126.00 | 28% |
| EHC | Encompass Health Corp. | $61.70 | $81.00 | 31% |
| WSO | Watsco Inc. | $139.14 | $180.00 | 29% |
| GPN | Global Payments Inc. | $103.13 | $135.00 | 31% |
| ORLY | O’Reilly Automotive Inc. | $344.43 | $410.00 | 19% |
| NEO | NeoGenomics Inc. | $12.61 | $19.00 | 51% |
| CLR | Continental Resources Inc. | $40.19 | $88.00 | 119% |
| UNP | Union Pacific Corp. | $138.23 | $180.00 | 30% |
| AME | Ametek Inc. | $67.70 | $87.00 | 29% |
| WTFC | Wintrust Financial Corp. | $66.49 | $88.00 | 32% |
| HP | Helmerich & Payne Inc. | $47.94 | $85.00 | 77% |
| PAG | Penske Automotive Group Inc. | $40.32 | $60.00 | 49% |
| SBNY | Signature Bank | $102.81 | $145.00 | 41% |
| NBL | Noble Energy Inc. | $18.76 | $40.00 | 113% |
| OBNK | Origin Bancorp Inc. | $34.08 | $45.00 | 32% |
| GRUB | Grubhub Inc. | $76.81 | $155.00 | 102% |
| CSFL | CenterState Bank Corp. | $21.04 | $30.00 | 43% |
Source: Stephens
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