Microsoft, Motorola, Knight-Swift and Discover Credit Suisse Top of the Crop Ideas

Credit Suisse selected four stocks in their latest “Top of the Crop” picks list, the banks conviction list for December. The four stocks are Microsoft (MSFT), Motorola Solutions (MSI), Knight-Swift Transportation (KNX) and Discover Financial Services (DFS). Product Manager Andrew St. Pierre defines the “Top of the Crop” stocks as the “highest conviction combined with the least demanding market expectations.”

The “Top of the Crop” criteria:

  • “Highest conviction Outperform ideas where CS analysts’ estimates and target prices are above consensus and consensus is not overly bullish.”
  • Credit Suisse’s HOLT is a model aiming for objectivity in converting income and balance sheet information into cash flow return on investment.
  • “Outperform ideas with least demanding market expectations. Market-implied CFROI is below forecast CFROI and historical median.”

On Microsoft

“For at least the next five years, we expect: (1) Azure to narrow the revenue gap to #1 Amazon Web Services and widen the gap to #3 Google Cloud, (2) Office 365 Commercial revenue to sustain growth in the mid-to-high teens through a combination of growing the Commercial installed base, converting the remaining installed base to O365 subscriptions, and upselling the base to premium SKUs and add-ons and leveraging pricing power,” analyst Phil Winslow wrote.

Top of the Crop are:

Microsoft (MSFT), Motorola Solutions (MSI), Knight-Swift Transportation (KNX) and Discover Financial Services (DFS).

Above consensus calls are:

International Game Technology (IGT), Hershey (HSY), Confluent (CFLT), Deere (DE), Goldman Sachs (GS), Sunrun (RUN), Amazon (AMZN), Flex (FLEX), Chipotle (CMG), HubSpot (HUBS) and Crown Holdings (CCK).

HOLT ideas are:

TransDigm (TDG), Ventas (VTR), Visa (V), HCA Healthcare (HCA), Ovintiv (OVV), UnitedHealth (UNH), Apple (AAPL), Affiliated Managers (AMG), Axon (AXON), Tradeweb (TW) and Arista Networks (ANET).

Source: Credit Suisse

From the TradersCommunity Research Desk