These stocks that are about to turn a profit should beat the market, Jefferies says

Published Sun, Jul 9 20236:57 AM EDT

Jefferies is eyeing companies that are improving their bottom line. In a Thursday note, the firm outlined a basket of stocks that may be on the brink of turning a profit. Buying stock in firms "that pivot from losing money to making money tends to outperform by several hundred bps [basis points]," according to Jefferies analyst John Colantuoni. "Though continued strength in the US economy has perplexed many and much focus remains on the end of the business cycle, equally, the environment remains supportive to certain companies," he said. "Whether it is achieving scale, market expansion, fine-tuned product offer, well-managed costs, or a productivity boost, these dynamics in some form, are combining to drive operational improvements and allowing several companies to hit substantive marks on their growth curve." CNBC pulled five standout stocks from the Jefferies list. DraftKings stock has soared more than 130% from January. Colantuoni said the company will benefit from entering "a critical mass of states" that will help lift earnings before interest, taxes, depreciation and amortization in 2024 and 2025. Jefferies has a buy rating on DraftKings stock with a $35 per share price target, or about 39% upside from Thursday's close. DKNG YTD mountain DraftKings stock has climbed more than 134% from the start of the year. Boeing , meanwhile, has also had a strong year with a 13% gain. Colantuoni said that once the company clears inventory of both the 737 MAX and 787 models, the firm sees "visibility to improved cash margins." Jefferies' buy rating and $250 per share price target equates to roughly 18% upside for the stock from Thursday's close. BA YTD mountain Boeing stock has added roughly 13% from January. SoFi is "one of the few companies that has attained a federal bank charter" in fintech, according to Colantuoni. This allows the company to maintain a lower cost of capital as well as a stronger net interest margin from longer-term loans, he said. SoFi stock has climbed more than 78% from the start of the year. The firm's $9.60 price target implies about 19% upside from Thursday's close. SOFI YTD mountain Jefferies' buy rating and $9.60 price target forecasts about 19% upside for SoFi Stock.