With the markets making new highs seemingly every day, it is understandable that investors may be finding it harder and harder to find stocks that do not appear overvalued, or at a minimum overbought. One sector that can be considered defensive while still having solid growth potential is pharmaceuticals. In a just released report, the analysts at Jefferies find some compelling valuations still available for investors in pharmaceutical stocks.

Citing very attractive stock valuations, despite the dramatic advance of the markets since the low last November, the Jefferies team list of stocks to buy is dominated by the large cap major pharmaceutical names. These stocks may prove to be solid investments for investors, given their liquidity and dividends. The list of pharmaceutical stocks to buy includes these names.

AbbVie Inc. (NYSE: ABBV) is the top pick on the Jefferies list. The analysts raise their price target from $45 to $50. The Thomson/First Call estimate for the stock is quite a bit lower at $37.50. AbbVie pays shareholders a 3.80% dividend.

Abbott Laboratories (NYSE: ABT) has earned a spot on the list. It is trading at less than 10 time earnings, and Jefferies raises its price target to $42 from $40. The Wall St. consensus estimate is $35.50. Investors receive a small 1.50% dividend.

Bristol-Myers Squibb Co. (NYSE: BMY) is a stock to buy. Due to the expanding profit margins and a quality pipeline, Jefferies ups its price target to $45 from $41. The consensus target for the stock is $36.25. Investors receive a 3.40% dividend.

Pfizer Inc. (NYSE: PFE) is another large cap name on the list. It recently received a breakthrough designation from the FDA for an experimental breast cancer pill. The Jefferies price target for Pfizer jumps to $33 from $31, while the consensus target is $31. Shareholders are paid a 3.30% dividend.

Zoetis Inc. (NYSE: ZTS) wraps up the Jefferies list of pharmaceutical stocks to buy. Its recent IPO that has performed extremely well. The price target on the stock is held steady at $40. The consensus price target is $38. Investors receive a tiny 0.80% dividend.

For investors holding other names and perhaps looking to switch, the Jefferies least-preferred stocks in the space are Eli Lilly & Co. (NYSE: LLY) and GlaxoSmithkline PLC (NYSE: GSK) on a valuation basis, and Merck & Co. Inc. (NYSE: MRK), due to its poor run in the research and development of new drugs.

While expecting solid earnings and forward guidance from their stocks to buy, the Jefferies team does not stray very far from their large cap bias. This makes good sense for investors looking to enter the sector because, in theory, it avoids the risks in smaller drug or biotech players. As we have advised recently, due to such a strong move in the markets, readers looking to buy these names may want buy half positions and look for a sell off to add the additional stock at a lower price.

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