With the potential for a year-end rally looking better after Monday’s market action, many investors are turning their attention to end-of-the-year portfolio restructuring. One of the best ideas may be to look for large cap, blue chip companies that have dropped in price and have actually fallen into the value category.

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 top value calls. All are rated Buy.

Ally Financial

This is the old financing arm of GM that was known before the Great Recession as GMAC. Ally Financial Inc. (NYSE: ALLY) has been rebuilt into a stronger and more solvent Internet-focused bank with no brick-and-mortar locations. Its customers do their banking solely through the bank’s website, its mobile application and automatic teller machines.

The Jefferies analysts feel flat out that in comparison to peers, and there are few actually structured like Ally, the stock is very cheap. Trading at a 7.7 times estimated 2016 earnings, and at a less than one times book value, the analysts feel that there is room to run. Most on Wall Street feel that the stock should trade more like 1.25 times book value.

Most on Wall Street feel that the bank is moving away from a dependence on GM and into a more balanced operating structure, which is good for long-term strategy. With the capital structure optimized and management having diversified the originations platform ahead of expectations, the stock has tremendous value at current levels.

The Jefferies price target for the stock is $28. The Thomson/First Call consensus price target is $27.39. Shares closed on Monday at $18.33.
Oracle

This is a mega-cap software company for investors to consider. Oracle Corp. (NASDAQ: ORCL) stock trades at 14.2 times estimated 2016 earnings, and it sports a solid free cash flow yield. Combined sales in Oracle’s cloud software, infrastructure and platform-as-a-service businesses were solid, and Jefferies feels that this business has room to grow.

Co-Chief Executive Officer Mark Hurd has made almost all Oracle services available via the Internet, as the database-software company changes its business model to fit a new competitive landscape. Revenue generated from software license updates and support constituted 52% of Oracle’s total revenue of $9.0 billion in fiscal second quarter of 2016, which Jefferies sees as in line with expectations.

The analysts also feel that as the company’s 12C database cycle starts to contribute during calendar 2016, the stock could very well be poised for what they term a breakout year.

Oracle investors are paid a 1.63% dividend. The Jefferies price objective is $50, and the consensus target is lower at $43.97. Shares closed most recently at $36.42.

Perrigo

This company has been weak for a variety of reasons, not the least of which was a failed bid from Mylan. Perrigo Company PLC (NYSE: PRGO) is a top five global over-the-counter (OTC) consumer goods and leading specialty pharmaceutical company that has grown to become the world’s largest manufacturer of OTC health care products and supplier of infant formulas for the store brand market. The company is also a leading provider of generic extended topical prescription products, and it receives royalties from sales of the multiple sclerosis drug Tysabri.

The Jefferies sum-of-the-parts valuation analysis has the overall dollar price level of the company much higher than where it is currently trading. In fact, they see the OTC business worth $20 billion, or 80% of the current price. They also see the generic business worth $5 billion. To the analysts, this means that the market is essentially pricing the value of the Tysabri segment at zero.

The bottom line for investors is, trading at current levels, the stock may offer solid upside. Toss in the recent discord in the sector, and the gain could be spectacular.

The Jefferies price target for the stock, which pays a small 0.35% dividend, is $209. The consensus target is $191. The stock closed Monday at $144.28 per share.

The Jefferies analysts focus on companies with solid balance sheets, good forward estimates and low valuations. These are the traits that investors should start to look for as the market gets ready to move away from the ultra-low interest rate environment of the past six years.

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