Jefferies Value Stocks to Buy This Week Have Large-Cap Stability

By Lee Jackson Updated Jan 13, 5:07PM EST · Published Nov 17, 9:10AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Jefferies Value Stocks to Buy This Week Have Large-Cap Stability — © Wikimedia Commons (Alex Proimos)

With the market experiencing a huge jump in volatility, one of the best things for investors to consider is a rotation in their portfolios to stocks that have value stock characteristics. Even though the Federal Reserve probably raises rates in December, stocks will remain a far better investment in 2016 than bonds. Value stocks may have the potential to outperform traditional growth, especially if the current volatility remains elevated.

Each week we cover the new value calls from the analysts at Jefferies and, increasingly, some of the calls may look surprising, as some solid blue chip companies are becoming so cheap on a multiple basis they are ending up in the value arena. This is the best of both worlds for investors, when large-cap growth companies become inexpensive enough to have a value call.

Here are three of this week’s value stocks to buy from Jefferies. All are rated Buy.

Bank of America

This true big money center bank has continued a methodical march back to financial health. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally.

Operating 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms, Bank of America continues to open new markets and expand share, which Jefferies feels it excels in. The Merrill Lynch brokerage arm has continued to supply the bank with outstanding revenues and growth.

ALSO READ: 4 Safe Dividend Stocks to Own as Terrorism Escalates Volatility

The Jefferies team met with CEO Brian Moynihan earlier this fall and came away feeling good about the overall outlook for the bank. With the potential for strong commercial lending and credit card originations, and trading at just under 11 times 2016 estimated earnings, the stock makes good sense now.

Bank of America investors are paid a 1.16% dividend. The Jefferies price target for the stock is $18, and the Thomson/First Call consensus target is $18.38. The stock closed on Monday at $17.43.
Mallinckrodt

This company has been on a mergers and acquisitions binge over the Past two years, but it got rocked last week over concerns about the company’s business model. Mallinckrodt PLC (NYSE: MNK) is a global specialty biopharmaceutical and medical imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and medical imaging agents. Areas of focus include therapeutic drugs for autoimmune and rare disease specialty areas like neurology, rheumatology, nephrology and pulmonology; neonatal critical care respiratory therapies; and analgesics and central nervous system drugs.

Jefferies thinks that the sell-off last week offers an excellent opportunity to grab shares, and while the firm lowered estimates earlier this year, the stock still trades at an incredibly cheap 7.2 times 2016 numbers. The analysts also believe that Mallinckrodt has no ownership in any specialty distributors.

ALSO READ: Major Changes Seen in Warren Buffett’s Stock Holdings

The $130 Jefferies price target is higher than the consensus target of $101.40. The shares closed Monday at $57.22.

Synchrony Financial

Hit hard since late July, this company may be the perfect value financial for a value portfolio. Synchrony Financial (NYSE: SYF) is one of the nation’s premier consumer financial services companies. It is the self-described largest provider of private label credit cards in the United States, based on purchase volume and receivables. It provides a range of credit products through programs established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and health care service providers to help generate growth for the company’s partners and offer financial flexibility.

Jefferies notes that private label cards are gaining share, and their research suggests a continuation of that trend. The analyst also notes that retailers continue to push back on rates, and private label cards offer more of a symbiotic relationship for retailers. Jefferies also believes that Synchrony offers the potential for capital returns after the spin-out from General Electric, and with the GE exchange offer now underway, the firm believes the resulting volatility could present an outstanding buying opportunity.

The Jefferies price target is $42, and the consensus estimate is $38.50. Shares closed Monday at $30.29.

ALSO READ: Oppenheimer Adds Top Triple-Play Stocks to Buy for the Rest of 2015

While by many traditional metrics these may not look like true values stocks to some investors, Jefferies has indeed found stocks that at current trading levels offer investors great value and upside potential.

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.