The rage for the past 10 to 15 years has been to index. Stock picking, once the trademark of such great managers as Peter Lynch and Bill Miller, was pushed out of favor as it became easier and cheaper to just index a portfolio. Now after a six-year plus rally that has pushed the S&P 500 up over 200%, and with stocks trading at a rich 18 times trailing earnings, stock picking is more important than ever.

A new report, the analysts at Jefferies post the performance of the Jefferies Franchise Pick List, which was introduced in December 2013 to highlight the firm’s highest conviction buy-rated stocks in the United States. The stocks on the list have returned 29% since inception, which is 12.5% above the S&P 500, and the bulk of that outperformance has come this year.

We screened the list for top stocks rated Buy with the highest upside to the Jefferies price targets.

Applied Materials

This stock is a semiconductor capital equipment leader that has lagged the overall tech market over the past year. Applied Materials Inc. (NASDAQ: AMAT) is actually now trading below its moving averages, and for patient investors it may be a high-quality pick now. The company is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Applied Material’s technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.

The analysts are very positive on the stock and see Applied Materials benefiting not only the semiconductor side of the business, but also from larger, higher resolution and flexible screens on the display side of the business. Many on Wall Street were disappointed when the merger with Tokyo Electron was called off recently, and some think that has contributed to the slide in the stock’s price.

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Despite reporting solid first-quarter earnings that were above consensus, as well as giving guidance that was in line with expectations, the stock has continued to underperform. It may very well be one of the best technology values available for investors today. Many Wall Street analysts see continued FinFET capacity expansion (10nm/14nm/16nm) and transition to 3D NAND, with DRAM spending remaining strong next year.

Applied Materials investors are paid a 2.04% dividend. The Jefferies price target for the stock is $28. The Thomson/First Call price target is $24.50. The stock closed Friday at $19.62 a share.