After years of relatively benign volatility, investors are getting a taste of something they are not very accustomed to. The Volatility Index (VIX) has been elevated since the start of the trading year, and with China, oil and other issues still stirring the pot, this could be the norm for the near future. One good idea is for investors to consider adding value stocks to their portfolios.

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 larger capitalization 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.

Hewlett Packard Enterprise

This company was recently part of the big split in operations at the iconic Hewlett-Packard. Hewlett Packard Enterprise Co. (NYSE: HPE) is now an industry leading technology company that enables customers to go further, faster. With the industry’s most comprehensive portfolio, spanning the cloud to the data center to workplace applications, the company’s technology and services help customers around the world make IT more efficient, more productive and more secure.

Earlier this year, the company announced a new partnership with Microsoft to offer new innovation in hybrid cloud computing through Microsoft Azure and Hewlett Packard Enterprise infrastructure and services, as well as new program offerings. The extended partnership appoints Microsoft Azure as a preferred public cloud partner.

Jefferies liked the company’s solid first-quarter earnings, which were in line with estimates. Hewlett Packard Enterprise posted impressive profitability in services, where operating margins were 8.2%, versus Wall Street’s 6.8% estimate. The analysts also note the company could increase the dividend this year, and networking is likely to remain the biggest revenue growth driver for the near term. Trading at just eight times the Jefferies 2017 estimates, which is below the group average of 10 times earnings, shares remain very reasonable.

Shareholders are paid a 1.16% dividend. The Jefferies price target for the stock is $25, and the Thomson/First Call consensus target is $20.23. The stock closed Friday at $19.04.

3M

This is a top industrial that could really jump with an economic pickup. 3M Co. (NYSE: MMM) is a diversified, global manufacturer. Its businesses are technology-driven and organized under five segments: Consumer, Safety and Graphics, Electronics and Energy, Healthcare, and Industrial. Its popular brands include Scotch, Post-It, 3M and Thinsulate. The company also holds over 500 U.S. patents.

The company slightly lowered estimates for the second quarter, which tagged the shares at the end of June, but they have rebounded nicely and the iconic blue chip giant remains a solid addition for long-term growth portfolios.

3M investors are paid a solid 2.51% dividend. The Jefferies price target is posted at $185, and the consensus target is lower at $171.87. Shares closed above that level on Friday at $177.12.
Synchrony Financial

Hit hard recently, this stock has bounced back and may be the perfect value financial for a growth 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.

The Jefferies team has noted in the past that private label cards are gaining share, and their research suggests a continuation of that trend. They also note that retailers continue to push back on rates, and private label cards offer more of a symbiotic relationship for retailers. The analysts also believe that Synchrony offers the potential for solid capital returns after the spin-out from General Electric.

The company’s recently announced capital plan came in at 60%, slightly higher than the 58% the analysts expected, with a lower dividend and higher share buyback. They believe this is a solid catalyst and trading at just 10 times 2017 earnings estimates, the stock looks cheap.

The $35 Jefferies price target is in line with the consensus estimate of $35.19 per share. Shares closed most recently at $27.31.

VMware

This company is down a stunning 31% since last August. VMware Inc. (NYSE: VMW) provides virtualization infrastructure solutions in the United States and internationally. The company’s virtualization infrastructure solutions include a suite of products designed to deliver a software-defined data center run on industry-standard desktop computers and servers, and support a range of operating system and application environments, as well as networking and storage infrastructures. Its solutions enable organizations to aggregate multiple servers, storage infrastructure and networks together into shared pools of capacity.

Of course the big issue is how the stock will trade going forward as a result of the Dell deal with EMC, which was a concern even before the deal surfaced. Some have said in the past that they feel that VMware will continue to trade at a discount to intrinsic value because of the overhang. While Jefferies acknowledges the continuing overhang risk, the firm also feels that business is surprisingly resilient and that the company continues to sign deals. Jefferies also a sees a huge $1.2 billion share buyback as a positive as it will drastically reduce the float.

Jefferies has a whopping $83 price target. The consensus target is $63.26, and the stock closed Friday at $59.18.

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All these stocks are more suited for aggressive growth accounts. They all could have some serious upside, and trading where they are now, the downside on all four looks to be more limited.

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