As the chatter over a Federal Reserve rate increase in June gets louder, the chances that volatility will spike along with the increase are getting bigger. While it’s possible the Fed could wait until July, the odds are getting bigger that a raise is in the cards. For stock investors, it makes sense to move out of higher volatility momentum-type stocks into quality value companies.
Jefferies is out again this week with top value calls from some of the firm’s very best analysts, and we found four that could be solid additions to growth portfolios. These four stocks to buy not only are solid value plays, but they could have good near-term upside potential. All are rated Buy at Jefferies.
This top stock has been absolutely mauled, down a gigantic 84% since the summer of 2014. Encana Corp. (NYSE: ECA) engages in the development, exploration, production and marketing of natural gas, oil and NGLs in Canada and the United States. It owns interests in plays such as the Montney in northern British Columbia and northwest Alberta, Duvernay in west central Alberta, Clearwater in central and southern Alberta, Deep Panuke in offshore Nova Scotia, Cadomin/Doig in northeast British Columbia, Horn River in northeast British Columbia and Granite Wash/Doig in northwest Alberta.
The Jefferies analysts are bullish on the company, and earlier this year elevated the stock to the Franchise Picks portfolio, which represents the highest conviction stocks at the firm. The company reported weaker first-quarter numbers year over year, but the Jefferies analysts feel that the big reduction and debt and the potential for the company to sell assets remain a positive.
The Jefferies price target for the stock was raised to a whopping $12, and the Thomson/First Call consensus target is much lower at $8.78. The shares closed Tuesday at $7.26.
This is a top stock to buy in the rapidly consolidating managed health sector. UnitedHealth Group Inc. (NYSE: UNH) offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 850,000 physicians and care professionals and 6,000 hospitals and other care facilities. The company offers a broad spectrum of products and services through two distinct platforms: UnitedHealthcare, which provides health care coverage and benefits services, and Optum, which provides information and technology-enabled health services.
The company has posted outstanding earnings over the past year, and it is one of the companies that limited exposure to the public exchanges. Trading at 3.5 times book value, and offering investors a good entry point, the stock makes great sense now, especially with solid enrollment increase for the fourth and first quarter. The analysts also note that the OptumCare opportunity is under-appreciated as the business can expand into more markets and note the value proposition is resonating with MCOs.
UnitedHealth investors are paid a 1.51% dividend. The Jefferies price target for the stock is $153, and the consensus target is at $149.24. The stock closed most recently at $132.59 per share.