[cnxvideo id=”655243″ placement=”ros”]Most of the top firms we cover here at 24/7 Wall St. are tweaking their high-conviction stocks lists for 2017, and many are trying to take into account macro changes that could make a difference this year. Those changes could include higher inflation, a stronger dollar and rising interest rates. The analysts also are trying to factor in positives like lower nominal tax rates and less of the ever-burdensome regulations that some feel have stifled business.
A new Jefferies research report features its third big change for 2017. The analysts remove red-hot telecommunications stock T-Mobile US Inc. (NYSE: TMUS) from the Franchise Picks list, as they believe the thesis for owning shares has played out.
T-Mobile provides mobile communications services in the United States, Puerto Rico and the U.S. Virgin Islands. It offers voice, messaging and data services in the postpaid, prepaid and wholesale markets. It also provides wireless devices, including smartphones, tablets and other mobile communication devices, as well as accessories that are manufactured by various suppliers.
The company offers services, devices and accessories under the T-Mobile and MetroPCS brands through its owned and operated retail stores, as well as through its websites. T-Mobile also sells its devices and accessories to dealers and other third-party distributors for resale through independent third-party retail outlets and websites. It serves approximately 63 million customers.
Jefferies was right on this stock for a long time, and the firm keeps a Buy rating, with a $71 price target. The Wall Street consensus target on the stock is $66.04. The shares closed most recently at $63.20.
[nativounit]
We also screened the Franchise Picks portfolio for the top dividend-paying stocks and found four that long like great buys now.
AbbVie
This is one of the top global pharmaceutical stocks picks across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company’s mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie employs more than 26,000 people worldwide and markets medicines in more than 170 countries.
One of the biggest concerns with AbbVie is what eventually might happen with anti-inflammatory therapy Humira, which generated $14 billion in sales in fiscal 2015. That was the most any drug has recorded during a single year and represents a gigantic part of the company’s overall earnings. The problem is that biosimilars and generics are itching to enter the market with Amgen leading the charge, and some Wall Street analysts project that AbbVie may have a difficult time stopping that trend.
Last year, the patent board instituted Coherus BioSciences’ Inter Partes Review against the Humira ‘135 patent. While most analysts remain positive on Humira duration, the expected litigation uncertainty could continue to create an overhang on the stock, which does give investors chances to pick up shares lower.
AbbVie investors receive a 4.14% dividend. Jefferies has a $90 price target, and the consensus target is $69.78. Shares closed Tuesday at $61.83.
Ally Financial
This company 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.
Jefferies feels that in comparison to peers, though few are actually structured like Ally, the stock is very cheap. With shares trading at a low 9.35 times estimated 2017 earnings, and at a minuscule one times book value, the analysts feel that there is room to run. In fact, their work indicates the stock should trade at more like 1.25 times book value.
With the capital structure optimized and management having diversified the origination’s platform ahead of expectations, the stock has tremendous value at current levels.
Shareholders receive a 1.4% dividend. The $27 Jefferies price target compares with the consensus target of $25.44. Shares closed on Tuesday at $23.18.
Boeing
This top aerospace industrial has been on a roll since the election and has broken out to all-time highs. Boeing Co. (NYSE: BA), together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.
The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital.
Recent reports indicate that the U.S. Navy plans to divest its older model F/A-18 Hornet fighter jets in coming years and hopes to buy dozens of F/A-18E/F Super Hornets to deal with a shortfall of strike fighters aboard its carriers. If implemented, the plan would provide dozens of new orders for Boeing and keep its St. Louis production line running for several more years.
The company recently reported quarterly results that topped analysts’ estimates. And the company’s outlook for 2017 was in line with analysts’ expectations.
Boeing investors are paid a 3.46% dividend. The Jefferies price objective is $185. The consensus target price is $173.70. Shares closed Tuesday at $175.56.
Halliburton
This company is still down almost 20% from highs printed in the summer of 2014. Halliburton Co. (NYSE: HAL) is one of the world’s largest providers of products and services to the energy industry. It serves the upstream oil and gas industry throughout the life cycle of the reservoir, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.
The oil field giant announced last year a $1 billion investment to develop huge potential oil fields in Ecuador and has entered into a long-time deal with Petroamazonas, an Ecuador-based company involved in the exploration and development of the country’s oil reserves. With oil looking to stabilize in the $40 to $50 range, this top oil service company is a great stock to buy on sale, as the oil recovery has shown some legs.
Halliburton is the second-largest provider of oil services and the number one player in pressure pumping services worldwide. Revenues in 2015 totaled $27.8 billion and EBITDA was $7.2 billion. For investors looking for an oil field services company to add, this is arguably the best, and analysts feel it will be a huge benefactor as the frac market has tightened significantly and prices are 20% to 30% off the lows.
Halliburton shareholders receive a 1.35% dividend. The Jefferies price target is $70. The consensus target is $63.54, and shares closed Tuesday at $53.84.
[wallst_email_signup]
A new deletion from the Franchise list portfolio and four additional dividend stocks that Jefferies views as among its top high-conviction picks. All these dividend-paying companies make good sense for aggressive long-term stock portfolios.
Top Gaining Stocks
Top Losing Stocks