BTIG highlights 'conviction' stock list, top picks for 2018

Published Tue, Jan 16 20183:38 PM EST

BTIG disclosed its top stock picks for clients Tuesday, calling the list of equities a "snapshot" of analyst views. "The Top Picks report compiles the highest conviction Buy-rated investment ideas to start 2018 from across the BTIG research platform," wrote strategist Julian Emanuel. The strategist said BTIG is overweight the energy, financial and health care sectors while less positive on others. The BTIG team listed a number of stocks they believe will outperform in the new year, complete with price targets and analysis. Here are four of the top picks. 1) Dollar Tree ( DLTR ) Analyst Alan Rifkin's $126 price target on the bargain store is 10 percent higher than Friday's closing price. "Dollar Tree is expected to benefit from continued acceleration of the Family Dollar segment, strong performance of the Dollar Tree segment, and synergy-driven margin expansion from the Family Dollar acquisition. The company also has a wide moat to protect from increased e-commerce, with low price points, small basket size, and convenient locations. State, city, and company minimum wage increases are expected to drive consumers to Dollar Tree and Family Dollar. Accelerating comps at the Family Dollar division and EPS upside is expected to drive shares to our price target and upside scenario." 2) Thermo Fisher Scientific ( TMO ) The life science company should add 9 percent from Friday's close in the next year thanks to improved execution, according to analyst Sung Ji Nam. "As the largest company focused on the life science tools sector, Thermo Fisher has a consistent track record of delivering mid-single digit organic revenue growth, and low to mid-teens EPS growth, by capitalizing on its scale and strong free cash flow generation. In 2018, barring a significant downturn in multiple end markets for Thermo Fisher, we believe Thermo Fisher's typical top and bottom-line growth profile can be sustained, particularly given the stability in the end market environment recently, continued strength in free cash flow generation providing EPS leverage, and potentially some positive impact from the U.S. tax reform." 3) Twitter ( TWTR ) Analyst Richard Greenfield is bullish on Twitter, arguing that company management is "in the early stages of a multi-year turnaround." His $30 price target represents 18 percent upside from Friday's close. "Management has refocused the company on its core product, pushed their product team to iterate far faster than ever before in the company's history, embraced video, and most importantly made the user experience more compelling by showing consumers the tweets they care most about through artificial intelligence and machine learning. The end result has been a larger and more engaged user base. As we have seen over an extremely volatile past 11 months since our upgrade to BUY, Twitter's recovery will not be a smooth straight-line, with much work to be done on the product, but we are increasingly confident that management has the company on the correct path." 4) T-Mobile ( TMUS ) Analyst Walter Piecyk's 12-month, $84 price target for T-Mobile is 32 percent higher than Friday's close. "T-Mobile has inflected to material free cash flow generation, while continuing to post strong revenue growth. That is not only a key milestone, but impressive performance that should result in a higher valuation as the company is taking market share within a recurring revenue business, where competitive concerns have waned and customer switching is at record lows. T-Mobile plans to use its free cash flow for share-repurchase and is executing on a recently announced $1.5 billion share repurchase program. In 2018, we believe it will begin to reap the benefits of its network investments and new store openings outside of metro markets, thereby sustaining its industry leading growth."

A man enters a Dollar Tree discount store in Garden City, New York.

Shannon Stapleton | Reuters

BTIG disclosed its top stock picks for clients Tuesday, calling the list of equities a "snapshot" of analyst views.

"The Top Picks report compiles the highest conviction Buy-rated investment ideas to start 2018 from across the BTIG research platform," wrote strategist Julian Emanuel. The strategist said BTIG is overweight the energy, financial and health care sectors while less positive on others.

The BTIG team listed a number of stocks they believe will outperform in the new year, complete with price targets and analysis.

Here are four of the top picks.