If anything will get investors looking for value stocks, it is the kind of drubbing the market could be in store for if the Greek debacle heats up more and boils over. While second-quarter earnings should be okay, and the economy is trying to get on the right track, adding value to a portfolio versus momentum growth makes sense, especially now.
In a new research note, Jefferies highlights numerous top value ideas for this week. We scanned the list for stocks that not only make sense in a volatile and dicey market, but may have the potential for a big move when sentiment improves, which now is as low as it has been in some time.
Affiliated Managers Group
This company reported outstanding first-quarter earnings, and the rest of the year looks solid as well. Affiliated Managers Group Inc. (NYSE: AMG) is a global asset management company that invests in boutique investment management firms called “affiliates.” The performance of these affiliates drives AMG’s own performance. AMG acts as a fund of funds for these entities.
The company also assists its affiliates in strategic matters, marketing, distribution, product development and operations. AMG holds equity stake in its affiliates, along with the independent management, which is responsible for deployment of the funds and generating returns. The affiliates are identified based on their growth potential, with products focusing on global equities, emerging market equities and alternatives. AMG manages three distribution channels through its affiliates.
With just over 10% fixed income exposure, the company is one of the least exposed in term on assets under management, and the most levered to equity. That is fine in a rising interest rate environment, but it could prove a touch more volatile in a wicked market sell off or an extended bear market. The Jefferies team feels the company has the flexibility to buy back shares, and at 14 times estimated 2016 earnings the stock is cheap.
The Jefferies price target for the stock is $254. The Thomson/First Call consensus price target is $263.89. The stock closed on Monday at $215.75 per share.