With a very toppy market, and more than one firm on Wall Street warning of a potential summer sell-off, we were very impressed with the stocks that populate the Jefferies Franchise picks list. Momentum names trading with astronomical price-to-earnings (P/E) multiples were noticeably absent. The list was an outstanding collection of solid names with good growth prospects for 2014 and beyond.
We screened the Jefferies list for the top picks in a variety of sectors with the lowest 2014 P/E multiples.
Activision Blizzard Inc. (NASDAQ: ATVI) is a big player with teens, who were recently surveyed and said they were buyers of new next generation gaming consoles. Sales of the popular games are sure to follow, and Activision has them, especially its huge franchise hit Call of Duty. The Call of Duty series was launched in 2003. Activision’s Call of Duty: Ghosts launched in Nov 2013 and turned out to be the best-selling game on the next generation PlayStation 4 and Xbox One consoles in the fourth quarter of 2013.
The newest, Call of Duty: Advanced Warfare, is expected to be a top summer seller. Investors are paid a 1% dividend. The Jefferies price target is $25. The Thomson/First Call estimate is at $24.22. The stock closed Tuesday at $21.45 a share.
Crown Holdings Inc. (NYSE: CCK) makes this list and trades at a low 14.27 times 2014 earnings. The company is a leading supplier of packaging products to consumer marketing companies around the world, with a market cap of $6.77 billion. The company has long-term estimated earnings per share growth rate of 11.65%. With economic growth expected to emerge globally, this could be a top pick going forward. The Jefferies price target is $56, and the consensus is at $52.27. The stock closed trading on Tuesday at $50.46.
Fifth Third Bancorp (NASDAQ: FITB) is a top regional banking name that makes the grade at Jefferies, and it trades at a low 12 times estimated 2014 earnings. The company cleaned up some headline risk last year when it settled an SEC accounting charge issue. Plus, the bank reduced its common shares outstanding by 3%, as it repurchased a net $912 million in shares last year as well. The company recently enjoyed a nice $81 million gain on its sale of about 12% of the stock it owned in payment processing firm Vantiv. Investors receive a 2.4% dividend from this leading Midwest bank. The Jefferies price target is $24.The consensus target is $24.21. Fifth Third closed Tuesday at $21.54.