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.

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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.
Ares Capital

This company is a high-yielding business development company (BDC) to buy. Ares Capital Corp. (NASDAQ: ARCC) is a leading specialty finance company that provides one-stop debt and equity financing solutions to U.S. middle market companies, venture capital backed businesses and power generation projects. Ares Capital originates and invests in senior secured loans, mezzanine debt and, to a lesser extent, equity investments through its national direct origination platform. Its investment objective is to generate both current income and capital appreciation through debt and equity investments primarily in private companies.

The Jefferies team believe the strength of company’s origination platform, sizable balance sheet and ample liquidity position them favorably in a very competitive investing environment. Other Wall Street analysts also believe that with current spread environment, Ares Capital has the scale and industry relationships to continue to make competitive, high-credit-quality investments.

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With $5 billion in capital, an outstanding management team, a tailwind from potential higher interest rates and a cheap valuation, the company is Jefferies top BDC pick.

Shareholders are paid a very competitive 9.21% dividend. The Jefferies price target is $17.50, but the $18.08 consensus target is higher. Shares closed Monday at $16.54.

Westrock

This recently completed merger of two top companies could be an outstanding opportunity for investors. Westrock Co. (NYSE: WRK) is the completed and merged company between the old Rock-Tenn and MeadWestvaco. Westrock becomes the second-largest U.S. packaging company, valued at $16 billion, trailing only International Paper with a market capitalization of $22.4 billion. Westrock is expected to generate net sales of $15.7 billion and adjusted EBITDA of $2.9 billion. This includes the impact of $300 million in estimated annual synergies to be achieved over three years.

The Jefferies analysts note that the company announced a stock repurchase program of 40 million shares, equal to 15% of the shares outstanding. They also announced a very generous 17% increase in the company dividend. The current dividend will be $1.50 per shares, or 0.375 cents per quarter,

Westrock investors will receive a 2.35% dividend. The Jefferies price target is $84, but a consensus target is not posted yet. Shares closed Monday at $63.75.

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Western Digital

This company is a leader in the total addressable hard disk drive (HDD) market at a very impressive 44%, and should experience lower shipments if PC trends stay the same through the balance of the quarter. Western Digital Corp. (NASDAQ: WDC) attributed much of the gain in revenue growth in recent quarters to the consumer electronics/gaming unit, which saw the biggest upside last year, shipping 10.9 million units, up 67% year over year. This could help temper the PC decline.

Many analysts have pointed out that PC shipment trends thus far in 2015 do not bode well for HDD vendors that are looking to try and reach their 2015 total shipment growth targets, which are currently in the low single digits. The horrible numbers from Micron tend to reinforce that even more.

The drop off in the PC business helps to spur initiative in the company’s cloud business, and the Jefferies analysts estimate that the company’s gross profit contribution from Business Critical (cloud) drives will exceed that of PCs by the second half of next year. Of all the stocks beaten down due to the poor PC environment, the Jefferies team feels Western Digital may have the most upside potential.

Western Digital investors are paid a 2.53% dividend. Jefferies has a $116 price target, and the consensus figure is lower at $113.29. Shares closed Monday at $79.81, down over 2%.

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If there was ever a time to look for value in the markets, it is now. With multiples stretched and volatility spiking, we could be in for a rough ride, and these stocks may have a far better chance of riding the storm out.

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