Top-Yielding Jefferies Franchise List Stocks to Buy for 2016

Investing

Published: December 23, 2015 8:25 am

Last Updated: January 13, 2020 3:47 pm

With very little trading time left in what has been a disappointing 2015, many investors are trying to sort out the landscape for 2016. One thing is for sure, despite the Federal Reserve raising rates last week, they are going to move very slowly with ensuing rate hikes, and the data will have to remain strong to support increases. For investors looking for yield, quality will remain just as important as quantity.

One odd anomaly since the Fed hiked rates is that yields on the five-year, 10-year and 30-year Treasuries have all dropped, and that certainly doesn’t point to investors being concerned about a spike in rates. We screened the Jefferies Franchise Picks list for the top-yielding stocks that reside on what is the firm’s selection of top recommendations. We found four with solid yields, and outstanding growth potential.

AbbVie

This is one of the top global pharmaceutical stocks at Jefferies. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company’s mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie employs more than 26,000 people worldwide and markets medicines in more than 170 countries

The stock fell 10% in late October after the FDA warning about liver risk with the company’s hepatitis C (HCV) products. However, Jefferies points out that this applies to a small sub-population of cirrhotics who are 5% or less of the total patient population. Also, the next generation HCV product could be launched as early as 2017. Even of the entire Viekira Pak/Technivie business were lost over the next two years, it represents only 4% of net percentage value.

Recently, AbbVie announced a five-year growth plan that is very shareholder friendly. It predicts total sales of about $37 billion in 2020, reflecting roughly 10% average sales growth over the next five-year period. For the third quarter, the company reported a profit of $1.24 billion, a significant increase from the $506 million it earned in the same quarter of 2014. The company’s sales increased by 8.40% year over year to $5.94 billion.

AbbVie investors receive a solid 3.96% dividend. The $85 Jefferies price target is among the highest on Wall Street. The Thomson/First Call consensus price target is $73.53. Shares closed Tuesday at $56.20.