Jefferies Has 4 Value Stocks to Buy Now on Continued Market Weakness

Investing

Published: January 21, 2016 11:25 am

Last Updated: January 13, 2020 2:46 pm

Baron Rothschild said it, or so the legend goes, “The time to Buy is when there is blood in the streets.” We all have seen plenty of blood in the streets since the beginning of 2016 and are probably tired of it. The bottom line is that lower stock prices puts multiples back in line with fair value, and when they are, portfolio managers look to add top stocks at reduced prices. Now many large cap growth companies are showing up as value picks, and that should spark some interest.

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 big blue chips 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.

Here are four of this week’s value stocks to buy from Jefferies. All are rated Buy.

CBS

This large cap broadcaster is off 20% since November and could be an incredible value. CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks. With an outstanding prime time lineup; solid sports franchises like the NFL, March Madness College Basketball and the Masters; and other top programming, the venerable network could once again be an outstanding stock for shareholders.

CBS is leading in the winter ratings and is poised to continue the network’s programming dominance in 2015. The broadcasting giant is now in the midst of a significant stock repurchase process, and many on Wall Street expect the company to shrink its share base by around 25% over the next two years.

Network advertising and strong content licensing revenue drove the upside in the third-quarter earnings, which beat consensus estimates despite a slight revenue miss. Similar to the broadcasting giant’s rivals, many analysts expect CBS to look to book content licensing more evenly over this year and into 2017. Trading at just 11 times 2016 estimated earnings, the stock is cheap and the analysts think estimates are low.

With Super Bowl 50 set to be shown on CBS, and strong ratings recently from both the NFL and prime time programming, CBS offers investors solid upside potential with minimum downside risk at the current time.

CBS shareholders receive a 1.36% dividend. The Jefferies price target for the stock is $62, and the Thomson/First Call consensus price target is $63. Shares closed most recently at $44.02.