Jefferies 3 Value Stocks To Buy With Big Upside Potential

By Lee Jackson Published Jul 30, 8:10AM EDT

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While the market has had a nice pair of back-to-back rally days, many investors are starting to be concerned on valuations again. That’s the time it makes sense to look at value stocks and perhaps rotate some higher beta companies into areas that are either beaten down and out-of-favor, or offering such compelling valuations that they can’t be ignored.

In a research report from the analysts at Jefferies, they have found three companies that could be offering investors tremendous upside from current levels. All three have Buy ratings and make up the top current analyst value calls at Jefferies.

CyrusOne Inc. (NASDAQ: CONE) is the top pick at Jefferies among the data center stocks. It designs, builds and operates facilities across the United States, Europe and Asia that give its customers the flexibility and scale to match their specific growth needs. The Jefferies analysts feel that some of the best returns in the data center sector may be found in the smaller players in the space like CyrusOne. The company trades at numerous lower multiples than their bigger competition, and the Jefferies target price still leaves it trading at an earnings multiple below sector peers.

CyrusOne is structured as a real estate investment trust (REIT) and unitholders are paid a solid 4.17% distribution. The Jefferies price target is posted at $37, and the Thomson/First Call consensus target is set at $35.61. The shares closed Wednesday at $30.42.

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Lantheus Medical Imaging Inc. (NASDAQ: LNTH) is a recent initial public offering and could have huge upside for investors. It is the parent company for which is a global leader in developing, manufacturing, selling and distributing innovative diagnostic imaging agents and products. Lantheus Medical Imaging provides a broad portfolio of products, which are primarily used for the diagnosis of cardiovascular diseases. We recently covered how analysts viewed this after the IPO quiet period.

One of the company’s lead products the echocardiography contrast agent DEFINITY Vial is favored by the Jefferies team as a game changer for the company. In fact, they think that the product sets them up for a period of accelerating earnings growth of 15+% over the next 5 years and significantly helps the company to deleverage the balance sheet. The Jefferies price target is a gigantic as they initiate the stock with a Buy rating at $12.00 versus a recent price of $7.20.

Unum Group (NYSE: UNM) may be a potential takeover target and posted solid earnings this week. Unum is a leading provider of financial protection benefits in the United States and the United Kingdom. Its primary businesses are Unum US, Colonial Life and Unum UK. Unum’s portfolio includes disability, life, accident and critical illness coverage, which help protect millions of working people and their families in the event of an illness or injury. The company reported revenues of $10.5 billion last year, and provided $6.7 billion in benefits last year.

The Jefferies team cites the recent purchase of Stancorp Financial at a big 50% premium in an all-cash deal as a potential catalyst for Unum. They think continued mergers and acquisitions in the space will be selective, and that with very limited liabilities, Unum Group trades cheap to where Stancorp was bought. Unum investors are paid a 1.98% dividend. The Jefferies price target for the stock is $40, and the consensus is at $39.11. The stock closed at $37.46.

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All of the Jefferies value stocks to buy have anywhere from good to massive upside potential. Plus, the offer investors far less downside worry than their momentum counterparts.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.