The pricier the market gets, the better stocks with value characteristics are starting to look. While a bear market doesn’t seem imminent due to the continued low interest rates and economic growth, investors wary of six years of a climbing market may want to shuffle the deck some. A new report from Jefferies highlights five value stocks to buy this week to which investors may want to shift capital.
In the research piece, the team at Jefferies has scoured the market for stocks that become the firm’s value calls for this week. Looking for a low price relative to valuation and peers is essential, but they are also looking for stocks with meaningful upside potential. Here are this week’s five top stocks to buy.
This top dividend stock recently was added to the Jefferies Franchise Picks list. AT&T Inc. (NYSE: T) has to be one of the most ignored dividend plays on Wall Street. While growth has been admittedly slower over the past few years, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic, but increased device financing plans. That is an area that some on Wall Street believe could lead to some earnings weakness.
The Jefferies team thinks that closing the DirecTV deal will remove a lot of lingering questions, especially where the company’s big dividend is concerned. They also believe that the synergies created by the deal are being underestimated by Wall Street and see upside to wireless margins. The analysts also think the combined entity should be trading at a higher multiple than currently being applied on a pro forma basis.
AT&T investors are paid, and Jefferies believes will continue to be paid, an outstanding 5.45% dividend. The Jefferies price target in set at $40, and the Thomson/First Call consensus estimate is at $34.57. Shares closed Monday at $34.59.