Despite last Friday’s meager payroll gains, most of Wall Street seems to be taking the low number as an anomaly and looking at overall brighter economic news. That was the case as the market bounced back sharply this week, as it now appears that the Federal Reserve may wait until July to lift rates. Either way, the rates will be raised, and it makes good sense now to look at the top value ideas.

Every week the analysts at Jefferies come out with top value picks for their clients, and this week’s companies are a solid collection of well-established firms that not only hold solid upside potential, but look fairly insulated from a huge drop if the market reverses. All are rated Buy at Jefferies.

CA

This is a company that Jefferies feels reported solid numbers and new business is growing faster than renewals. CA Inc. (NASDAQ: CA) provides information technology (IT) management software and solutions that help organizations plan, develop, manage and secure applications and IT infrastructure in the United States and internationally.

The better-than-expected fiscal fourth-quarter earnings were accompanied by guidance that was also better than expected. While revenue was slightly lower than last year, it also came in higher than expected.

The Jefferies analysts feel that with growth outpacing renewals, which is a requirement for revenue growth, their main thesis on the company has been that the stock is not priced for growth, having little downside if it does no achieve growth, but good upside if it does, and this has played out well since last fall. The analysts continue to like the overall total return potential.

CA investors receive a 3.12% dividend. The Jefferies price target for the stock is $36, but the Thomson/First Call consensus target is $31.70. Shares closed above that level, at $32.74, on Tuesday.

Infinera

Some feel this top company would be an outstanding addition to a networking giant as a takeover candidate. Infinera Corp. (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations. Infinera’s end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. Infinera’s unique large-scale photonic integrated circuits enable innovative optical networking solutions for the most demanding networks.

Alphabet’s recent announcement that it will be adding 12 new data center regions is a definite positive for Infinera. The company also has a 9% share of the automotive chip market, which continues to provide additional tailwind for earnings growth. Jefferies recently met with the CEO Thomas Fallon, and he highlighted the opportunity in wireless backhaul and fronthaul applications as they expect operators will need up to 10 gigabits of capacity per antenna over time.

Jefferies has an $18 price target, and the consensus price objective is $18.33. Shares closed most recently at $13.26.
Medtronic

This company is now based in Ireland after the gigantic merger with Covidien in 2015. Medtronic PLC (NYSE: MDT) is a medical devices giant, and many on Wall Street saw this historical merger, probably one of the largest in the medtech industry, as a momentous event, leading to the creation of a unique company that combines the extensive and innovative abilities of both Medtronic and Covidien. The combined company officially has joint forces of over 85,000 employees present in more than 160 countries.

Top analysts feel that the contributions from Medtronic’s three growth drivers, which they cite as therapy innovation, globalization and services/solutions, should support a 5% or greater constant currency top-line growth this year and beyond. Some also feel that the Covidien earnings potential is underappreciated, and the change in domicile is also a positive.

The company also still is pursuing a huge new restructuring move that is expected to free up $9.3 billion in cash, which can help pay down debt, buy back shares or maybe even help with a selective acquisition. With the stock trading at 16.5 times 2017 estimates, Jefferies feels it is too cheap given the stability at the company and the 10% or so earnings growth.

Medtronic investors receive a 1.82% dividend. The $93 Jefferies price target compares with the consensus target of $86.98 and the $83.72 share price on Tuesday’s close.

Shire

This is one of the top picks on Wall Street in specialty pharma. Shire PLC (NASDAQ: SHPG) develops, licenses, manufactures, markets, distributes and sells pharmaceutical products. It offers various products for the treatment of attention deficit hyperactivity disorder. The company also focuses on the development of resources projects in various therapeutic areas, including rare diseases, neuroscience, ophthalmics, hematology and gastrointestinal disorders, as well as early development projects, primarily on rare diseases. Shire markets its products through wholesalers and pharmacies.

Many analysts were perplexed by the somewhat mixed market reaction to the Baxalta bid. Baxalta was spun off from Baxter last year, and the market correction in the fall provided investors a compelling opportunity to refocus on company’s true intrinsic value. The Baxalta acquisition could produce $13 billion in revenues for Shire’s rare disease portfolio by 2020, according to Bloomberg Intelligence analysis. Sales at the combined entity are projected to reach $20 billion.

The Jefferies team has adjusted its number to account for the completion of the Baxalta transaction and expect high digit accretion, and they raised the long-term earnings per share growth estimate to 15.5%. They even think top and bottom line synergies could be higher and the lifitegrast launch could be a positive catalyst.

Shire investors receive a tiny 0.42% dividend. The $262 Jefferies price target is higher than the consensus target of $242.71. The shares closed Tuesday at $192.02.

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These are four solid value stocks, all among the leaders in their respective sectors. They make good sense for patient growth investors with a solid long-term time horizon.

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