Jefferies Top Stock Buys Are Also Huge Compelling Values

By Lee Jackson Updated Jan 11, 8:33PM EST · Published Jul 24, 8:05AM EDT

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Jefferies Top Stock Buys Are Also Huge Compelling Values — © Thinkstock

It’s one thing to buy a value stock, or a company with a very low multiple that is trading below historical multiple levels. It’s quite another thing to buy a compelling value stock, because that is one in which value can be unlocked by earnings gains, a change in the macro environment or a headline event like a takeover or merger proposal. Those are companies that savvy experienced investors look for in frothy and potentially volatile markets.

A new Jefferies research report circles in on stocks the firm feels are compelling values for investors now. We like these four companies, and shares of all are rated Buy at Jefferies.

Check Point Software

This stock has taken off recently but still offers solid upside. Check Point Software Technologies Ltd. (NASDAQ: CHKP) provides network security solutions, selling software, hardware and subscription services for IT security, with a focus of reducing complexity of security management. Its hardware is based on a software blade architecture that allows for multiple security functions to be run concurrently.

Check Point sells its solutions to service providers, small and medium-sized businesses, consumers and enterprises, including all the Fortune 100 companies. This long-time industry leader used to be a must-own stock for tech portfolios. The analysts noted this in the research report:

We were out with our second quarter software preview and note that this quarter may be an attractive entry point for Check Point given low expectations, easier future comps and an eventual product refresh. The bar is fairly low for the quarter and we see potential for results to show improvement in the second half of the year.

The Jefferies price target for the shares is $127, but the Wall Street consensus target is just $108. The shares closed on Monday at $109.92 apiece.

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Comcast

Jefferies recently added this top media and entertainment company to its well-respected Franchise Picks list. Comcast Corp. (NASDAQ: CMCSA) is the largest U.S. provider of cable services, with over 22 million basic subscribers. It owns NBCU, which includes the NBC TV Networks, Telemundo, MSNBC, USA, Syfy, Bravo, E!, CNBC and several other cable networks, as well as Universal Films and Universal Theme Parks.

Comcast has invested in technology to build an advanced network that delivers among the fastest broadband speeds and brings customers personalized video, communications and home management offerings.

With the midterm election cycle starting up soon, this company stands to benefit big time, and a stunning 69.6% of the fund managers own the shares. Plus, the company has declined to pursue the Fox assets any further and is now focusing on a full commitment to acquiring Sky.

Investors receive a 2.18% dividend. Jefferies has a $41 price target, while the consensus target is $46.95. The shares closed Monday at $34.17.

UTC

This very diversified company has large government contract exposure. United Technologies Corp. (NYSE: UTX) is an industrial conglomerate with four operating units:

Otis: the world’s largest elevator company
Climate, Controls & Security: includes Carrier, which has commercial and residential HVAC and commercial transport refrigeration equipment and fire and security
Pratt & Whitney: military and civil aircraft engines and service operations
Aerospace Systems: aviation controls and systems

The analysts love UTC’s prospects going forward and noted this:

We attended the Farnborough Airshow last week and what we heard at the show reinforces the stock as a top supplier pick. We believe the GTF engine should begin to reach an inflection point in 2019, a view confirmed by an OEM. We recently did a deep dive discussing the various things that could go right on the margin front that would help shares.

Tuesday morning, UTC posted big second-quarter earnings and offered very positive forward guidance.

Investors receive a 2.15% dividend. The $157 Jefferies price target compares with the $150.18 consensus target. The stock closed Monday at $129.57 and traded higher in Tuesday’s premarket.

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Williams Companies

This also was added recently to the Jefferies Franchise Pick list of top stocks. Williams Companies Inc. (NYSE: WMB) is now largely a pure-play domestic natural gas infrastructure company that has a 74% ownership interest in its underlying master limited partnership, Williams Partners. Shareholders will vote on a complete merger on August 9, and most believe that soon after that the Williams Partners deal will close.

The company has a lower risk, fee-based business model with some volume sensitivity. Natural gas demand continues to be driven by liquefied natural gas exports, power generation and industrials. In addition to steady demand growth, Marcellus production and associated gas in the Permian are expected to continue to be primary supply drivers.

Shareholders receive a 4.72% dividend. Jefferies has set its price target at $34. The consensus target is $33.71, and shares closed Monday at $28.80.

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Four top stocks to buy with growth stock qualities and value stock metrics. All offer growth investors good potential for the rest of 2018 and a degree of downside protection in a pricey stock market.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.