As yields continue to contract, one thing is for sure, people are buying government debt because they are concerned the markets are frothy, not because they think the debt is such an outstanding value. With the volatility index (VIX) rising to the highest level since late February, clearly investors are looking for safety, and it may be a smart time for equity investors to do the same.

Each week the analysts at Jefferies put out their top values buys for investors to consider, and this week may be a good time for investors to consider moving some capital into the value arena. With a summer of potential volatility events right around the corner, caution makes sense.

Arris International

This stock has been a Jefferies favorite for years and is a top value pick this week. Arris International PLC (NASDAQ: ARRS) provides media entertainment and data communications solutions in the United States and internationally. It operates through two segments. The Customer Premises Equipment segment offers various product solutions, including set-top boxes, gateways, digital subscriber lines and cable modems, and embedded multimedia terminal adapters and voice/data modems that enable service providers to offer voice, video and high-speed data services to residential and business subscribers.

The Network & Cloud segment provides cable modem termination system, converged cable access platform, multichannel video programming distributors, programmer equipment, ad insertion technologies and equipment in the ground or on transmission poles, as well as equipment used to initiate the distribution of content-carrying signals.

While the concern over the set-top box arena is valid, Jefferies feels that it will be years before demand slows, and trading at a low 8 times estimated 2017 earnings, the stock is cheap at current levels.

The Jefferies price target was dropped to $31, and the Thomson/First Call consensus target is $32.71. Shares closed most recently at $22.75.

Energy Transfer Equity

This company was trying to merge with Williams Energy but the deal looks to be falling through, despite the approval of the U.S. Federal Trade Commission. Energy Transfer Equity L.P. (NYSE: ETE) provides diversified energy-related services in the Unites States. It owns and operates approximately 7,700 miles of natural gas transportation pipelines and three natural gas storage facilities located in the state of Texas, as well as approximately 12,800 miles of interstate natural gas pipeline. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users and other marketing companies.

Jefferies likes the stock as a solid natural gas play, and with the summer heat already upon great swaths of the country, the power companies may be using more and more natural gas as demand spikes as the air-conditioning works overtime.

The analysts note that despite the merger approval, they feel that the inability to acquire a 721 tax opinion from Latham & Watkins, which is a written condition of its merger with Williams an issue to be considered by the Delaware Courts later this month, they think the deal is unlikely to close so they are valuing both companies on a standalone basis now. A 721 tax opinion makes the deal tax free for shareholders.

Investors receive a solid 8.98% distribution. The Jefferies price target was lifted to $17 from $15, and the consensus price target is $13.75. Shares closed Tuesday at 12.69.
Tyson Foods

This is the ultimate consumer staples type play for worried investors. Tyson Foods Inc. (NYSE: TSN) operates as a food company worldwide. It raises and processes chickens into fresh, frozen and value-added chicken products; processes live fed cattle and live market hogs; and fabricates dressed beef and pork carcasses into primal and subprimal meat cuts, as well as case-ready beef and pork and fully-cooked meats.

The company offers its products primarily under the Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells, and State Fair brands, as well as Van’s, Chef Pierre pies, Aidells, Gallo Salame and Golden Island premium jerky brands.

The Jefferies team lowered their 2017 earnings estimates some, but trading at a very reasonable 13 times their $4.60 per share estimate, the stock holds value at current trading levels.

Tyson investors are paid a 1% dividend. Jefferies has a $70 price target, and the consensus target is higher at $75.27. The stock closed most recently at $60.29.

Williams Companies

The company on the other end of the Energy Transfer Equity deal is also a favorite value play at Jefferies. Williams Companies Inc. (NYSE: WMB) operates as an energy infrastructure company primarily in the United States, through its Williams Partners, Williams NGL (natural gas liquids) & Petchem Services, and Other segments. It owns and operates natural gas pipeline system extending from Texas, Louisiana, Mississippi and the offshore Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania and New Jersey to the New York City metropolitan area.

The company also owns and operates a natural gas pipeline system extending from the San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon and Washington to a point on the Canadian border near Sumas, Washington. Its gulfstream natural gas pipeline system extends from the Mobile Bay area in Alabama to markets in Florida.

Jefferies also likes this company as a top natural gas play for investors. Investors are paid a huge 12.09% distribution. The Jefferies price target was lowered to $27, and the consensus estimate is $26.50. Shares closed on Tuesday at $21.18.

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It is important for investors to remember that the distributions of the MLP value stocks may contain return of capital. Also note that if the deal does fall through, there could be some extreme volatility in both companies as arbitrage accounts scramble.

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