Jefferies says buy these 7 back-to-school stocks for big returns with much of the US going remote

  • A group of analysts at Jefferies pinpointed a cohort of stocks that has the potential to benefit from a virtual or hybrid back-to-school season. 
  • This shifting dynamic away from in-person learning should provide a boon to the seven handpicked stocks.
  • Recently, The University of North Carolina at Chapel Hill pulled the plug on its hybrid model, shifting to 100% remote learning after just one week.
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This back-to-school season is guaranteed to be a bit odd.

With a global pandemic still in full swing, many are gearing up to study from the comfort of their own homes rather than risk possible exposure in crowded hallways or classrooms. 

"Back to school is going virtual and with kids at home, time & walletshare will be different," said a group of equity analysts at Jefferies in a recent note.

"Across 83 districts (top 50 in the US by enrollment + largest in each state, if not in top 50), 47% (59% of students) will return in a virtual setting and 53% in a hybrid format," they added, referring to a survey they conducted.

So far, the hybrid model doesn't seem to be too successful. 

After just a week's time, The University of North Carolina at Chapel Hill pulled the plug on its hybrid model, shifting to 100% remote learning after a quick uptick in COVID-19  infections. 

The analysts provided the following visuals. A swath of districts, schools, and students were surveyed to arrive at the figures below. A large portion of students said they will remain out of the classroom. And the economic implications stemming from that shift could be widespread. 

The analysts also provided the following chart showing the change in Google search trends for customary education products. More traditional back-to-school items have seen a dramatic decline in search. 

That's why Jefferies is shifting their focus to the stocks that will potentially benefit from a stay-at-home, virtual, or hybrid school year.

Here are the seven stocks the analysts selected that look like enticing buys. The picks are listed in alphabetical order.

1. American Eagle Outfitters

Ticker: AEO

Sector: Consumer Cyclical

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

2. Bright Horizons Family Solutions

Ticker: BFAM

Sector: Consumer Cyclical

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

3. Chegg

Ticker: CHGG

Sector: Consumer Defensive

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

4. Casella Waste Systems

Ticker: CWST

Sector: Industrials

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

5. Spin Master

Ticker: TOY

Sector: Consumer Cyclical

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

6. Ulta Beauty

Ticker: ULTA

Sector: Consumer Cyclical

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

7. US Foods Holding

Ticker: USFD

Sector: Consumer Defensive

Rating: Buy

Source: Jefferies LLC / Jefferies Research Services, LLC

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