On Wall Street concern is growing that the Federal Reserve is behind the curve and should be ramping up rate increases sooner rather than later. Also a growing number of pundits think that the Fed is just trying to get past the election without a 20% drop in the stock market. One thing is for sure, many people are selling, and will continue to do so. One solid course of action is to start moving to value stocks.

The Jefferies analysts put out weekly calls on some of the top value stocks that the company has rated Buy. We screen their calls weekly looking for the companies with the best potential upside that may also fare better in the event of a sizable market sell-off. This week we found five that look very attractive.

AT&T

This company had an outstanding first quarter from a stock price standpoint and could be poised to go higher. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

The company’s first-quarter revenue rose 24% versus the year-earlier period primarily due to the July 2015 acquisition of DirecTV for $49 billion in equity value. The company added 2.3 million wireless subscribers during the first quarter. About 328,000 of the additions were DirecTV net adds. The company’s Entertainment Group broadband grew with 186,000 IP broadband net additions.

Jefferies noted that after evaluating three scenarios that address and combat cannibalization, certain new initiatives should be impactful. As over-the-top (OTT) video becomes more prevalent, the analysts examined the per-subscriber economics relative to that of traditional video, and highlight key implications in a streaming video world. With AT&T set to launch new offerings later this year, the analysts provide a case study highlighting potential opportunities and risks. They see the potential for modest accretion in 2020, with further upside should AT&T successfully minimize cannibalization within its existing base.

AT&T investors receive a 4.94% dividend. The Jefferies price target for the stock is $42, and the Thomson/First Call consensus target is $39.54. Shares closed Thursday at $38.84.

CBS

This large cap broadcaster has bounced nicely off the lows and still could be an incredible value. CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks with an outstanding prime time lineup, solid sports franchises like the NFL, March Madness College Basketball, The Masters and other top programming, the venerable network could once again be an outstanding stock for shareholders.

The company is leading in the spring ratings, and is poised to continue the network’s programming dominance in 2016. The broadcasting giant is now in the midst of a significant stock repurchase process, and many on Wall Street expect the company to shrink its share base by around 25% over the next two years.

Network advertising and strong content licensing revenue drove the upside in the third-quarter earnings, which beat consensus estimates despite a slight revenue miss. Similar to the broadcasting giant’s rivals, many analysts expect CBS to look to book content licensing more evenly over this year and into 2017.

The Jefferies team sees the company as a big winner as viewership changes and cord cutting start to affect viewership. In fact they see a 10 million subscriber decline by 2015, and they believe that CBS remains a winner as re-transmission rates will continue to climb and offset the subscriber declines, especially at strong broadcast networks like CBS.

CBS shareholders receive a 1.1% dividend. Jefferies has a $62 price target, and the consensus figure is $63. Shares closed Thursday at $55.40.
Freeport-McMoRan

This company has been absolutely crushed over the past five years, and it may indeed be a compelling value at current levels. Freeport-McMoRan Inc. (NYSE: FCX) is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. It is also the world’s largest publicly traded copper producer.

The company’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits. It has significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. Other assets include the Tenke Fungurume minerals district in the DRC, as well as significant U.S. oil and natural gas assets, principally in the Deepwater Gulf of Mexico and in California.

The company recently postponed an oil and gas spin off, and the market responded very positively. The company also has continued to shed assets and build up a solid cash position.

The Jefferies team notes that there’s been considerable market chatter over a Rio Tinto possible acquisition of the company. While there are situations that would need to be resolved to complete such a transaction, they think it could be an outstanding fit. They note that such a deal would lessen Rio Tinto’s exposure to iron ore, and increase the company’s exposure to copper.

The $15 Jefferies price target compares with the consensus estimate of $10.91 and the most recent closing share price of $10.66.

Simon Property Group

This is one of the largest real estate investment trusts (REITs) and it boasts an outstanding market position. Simon Property Group Inc. (NYSE: SPG) invests in the real estate markets across the globe. It engages in investment, ownership, management and development of properties, primarily regional malls, premium outlets, mills and community/lifestyle centers. Through its subsidiary partnerships, it owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.

The company posted very solid first-quarter numbers and raised its outlook going forward.  The first-quarter funds from operations exceeded the consensus earnings per share estimate. Growth in operating income and new developments and expansions aided the results. Total revenue in the quarter increased 9.9% year over year, trouncing the consensus estimate.

While many fear the move away from brick-and-mortar stores, the Jefferies team notes that A level malls, many of which Simon’s owns, are exhibiting no signs of a slowdown in demand for high-quality mall space. With a lack of new supply coming, they see things shaping up nicely for this sector leader.

Investors receive a 3.22% distribution. The Jefferies price target is $250. The consensus target is $228.95, and shares closed Thursday at $197.40.

Western Digital

This long-time innovator in the storage industry is a leader in the total addressable hard disk drive (HDD) market. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that help to create, manage, experience and preserve digital content.

Western Digital is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed. Its products are marketed under the HGST and WD brands to original equipment manufacturers, distributors, resellers, cloud infrastructure providers and consumers.

The most compelling news is that the company announced a stunning $19 billion purchase of SanDisk last year. This could be a strong addition to the Western Digital current offerings. The company could significantly benefit from SanDisk’s technology and portfolio leadership in the NAND flash semiconductor and enterprise flash systems market. The value of the deal for SanDisk is now $78.50 per share, down from $86.50 when it was originally struck.

The company missed earnings estimates and guidance was much lower than expected when it reported most recently, as weakness in the HDD arena persists. However, Jefferies sees the SanDisk purchase as potentially an accretive one, and operating savings from the integration of the two HDD businesses are not reflected in the current stock price. The firm also thinks that trading at eight times the current 2017 earnings per shares estimates, the stock is cheap.

Western Digital shareholders receive a 4.13% dividend, which could possibly be cut to save free cash flow. The Jefferies price target is set at just $50, which could increase, while the consensus target is $58.82. The stock closed Thursday at $48.38.

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Clearly the value for investors with these stocks lies in the fact that most are trading way below former highs, and they have had a large amount of speculation taken out of the pricing. While more appropriate for growth accounts with a little more risk tolerance, they all offer solid entry points.

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