Jefferies Now Sees Top Value Stocks Outperforming Growth Stocks

The U.S. product management team at Jefferies has spotted the turn. In a new research report, they highlight some of the top names to buy in the value sector. Value stocks are defined typically as stocks that tend to trade at a lower price relative to its fundamentals. This could include dividends, earnings, sales and more. Common characteristics of the stocks in the value category are high dividend yields, a low price-to-book ratio and a low price-to-earnings ratio.

Here are some top value stock names to buy from the research team at Jefferies.

Ford Motor Co. (NYSE: F) makes the list of values stocks to buy. Trading at a low 10.3 times forward earnings, the automaker appears to have a ton of upside going forward. Investors are paid a solid 2.4% dividend. The Thomson/First Call price target for the stock is $21 and Ford closed Tuesday at $17.09.

Wal-Mart Stores Inc. (NYSE: WMT) is a top retail name in the value category. With a slow economy and slow rising wages, consumers are still looking to get the most bang for their buck, especially during the holiday shopping season. Investors are paid a 2.4% dividend. The consensus price target for the retail giant is $82. Wal-Mart closed Tuesday at $77.42.

Lorillard Inc. (NYSE: LO) offers investors a tiny forward multiple and an outstanding dividend. The maker of Newport cigarettes has been under pressure for some time as the FDA considers a ban against menthol cigarettes. Many on Wall Street think that outcome is unlikely, although strict marketing guidelines may be made even tougher. Shareholders are paid a large 4.3% dividend. The consensus price target for the stock is posted at $52. Lorillard closed Tuesday at $51.85

Wells Fargo & Co. (NYSE: WFC) makes the list and is the leader in the home mortgage category among U.S. banks. With risk moving out of the category, and rates going higher, banks like Wells Fargo are starting to offer 5% down mortgages to entice buyers. The stock pays shareholders a 2.8% dividend. The consensus price target is $46, and the bank closed Tuesday at $42.63.

Microsoft Corp. (NASDAQ: MSFT) makes the value category, to the surprise of some investors. The software giant has a solid dividend and trades at a very low 12.6 times forward earnings. Investors are paid a 3.2% dividend. The consensus price target for the stock is placed at $35. Microsoft closed Tuesday at $36.64. We even recently hinted somewhat jokingly that the last Microsoft earnings report was good enough that perhaps Microsoft may want Steve Ballmer not to retire.

Apple Inc. (NASDAQ: AAPL) is another huge tech stock that may surprise investors to be labeled a value stock. With a mountain of cash, a solid dividend and trading at just 13 times forward earnings projections, the stock fits the category perfectly. Investors are paid a 2.3% dividend. The consensus price target for the smartphone and tablet leader is $590. Apple closed on Tuesday at $526.75. We would point out that the migration from the greatest growth stock of a lifetime to being a value stock is one that has been painful.

Raytheon Co. (NYSE: RTN) is a value name to buy in the defense and aerospace sector. While worries over government spending cuts dog the sector, Raytheon has continued to grow earnings and surprise Wall Street. The company pays investors a 2.6% dividend. The consensus price target is posted at $82. The stock closed above that figure on Tuesday at $84.49.

Given the dramatic move in the equity markets in 2013, it makes sense for investors to start shifting some of their capital out of growth names and into value. The great aspect of many of the names to buy at Jefferies is that the stocks all can be growth names due to outstanding product or service lines. Plus, the solid dividends will help to increase investors’ total return.