Investing

4 Top Jefferies Value Stocks to Buy Have Big Upside Potential

One thing is for sure, most equity investors were relieved to see a very strong rally to end the trading last week. While the talk of a recession right around the corner looks to be very premature, the fact that the bull market is getting long in the tooth is probably not. All the more reason for investors to look for value stocks that have solid upside potential and solid valuation.

A recent Jefferies research report from focuses on some large cap stocks that are still trading way below their 52-week highs. At current levels they offer investors not only a solid entry point, but some serious upside potential. All are rated Buy at Jefferies too.

Deckers Outdoor

This company has always done a job on short sellers, and it may be primed for a good run higher. Deckers Outdoor Corp. (NYSE: DECK) is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities.

The company’s portfolio of brands includes UGG, Teva, Sanuk, Ahnu, HOKA ONE ONE and Koolaburra. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 154 company-owned and operated retail stores, and select online stores, including company-owned websites.

Jefferies points out that corporate management is energized on the new product front, with a revamped UGG classic coming in August that will have a water-resistant finish and a new sole. And the company continues to drive efficiency, with more of a focus on e-commerce and a reduced reliance on the owned-store model. Deckers plans to close around 20 stores.

The Jefferies price target for the stock is $75, and the Thomson/First Call price objective is just $55.83. The stock closed above that on Friday at $60.55.


Oracle

This top software stock has traded sideways since last summer and looks to be breaking out. Oracle Corp. (NYSE: ORCL) develops, manufactures, markets, sells, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services worldwide. It licenses its Oracle Database software to customers, which is designed to enable reliable and secure storage, retrieval and manipulation of various forms of data. Its Oracle Fusion Middleware software aims to build, deploy, secure, access and integrate business applications, as well as automate their business processes.

With shares trading at 15.83 times estimated 2016 earnings, and with a solid free cash flow yield, many analysts also feel that Oracle’s 12C database cycle starts to contribute during calendar 2016, and the stock could very well be poised for what they term a breakout year. After recent investors meetings, some analysts raised fiscal year 2017 cloud margins to 66% from 63% and earnings per share to $2.80. Some also believe that the software giant may be on the verge of a multiyear database product cycle.

The company recently reported solid results, in which license earnings were below estimates, but revenue from the cloud much higher. Jefferies continues to believe fiscal 2016 will be a trough year for company in many ways, and notes that the maturing sales force and selling strategy is beginning to unlock pent-up cloud demand within the company’s sizable customer base.

Oracle investors receive a 1.45% dividend. Jefferies has a $50 price target, and the consensus target is $43.50. The stock closed Friday at $41.48.

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