It’s one thing to buy a value stock, or shares of a company with a very low multiple that are trading below historical multiple levels. It’s quite another thing to buy a compelling value stock, because that is one in which value can be unlocked by earnings gains, a change in the macro environment or a headline event like a takeover or merger proposal. Those are companies that savvy experienced investors look for in frothy and potentially volatile markets.

In a new research report, Jefferies analysts circle in on stocks they feel are compelling values for investors now. We like three of the companies, and all are rated Buy at Jefferies.

CBS

This large cap broadcaster has bounced nicely off the lows and still could be an incredible value. CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks with an outstanding prime time lineup, solid sports franchises like the NFL, March Madness College Basketball, The Masters and other top programming, the venerable network could once again be an outstanding stock for shareholders.

The company is leading in the spring ratings, and is poised to continue the network’s programming dominance in 2016. The broadcasting giant is now in the midst of a significant stock repurchase process, and many on Wall Street expect the company to shrink its share base by around 25% over the next two years.

Network advertising and strong content licensing revenue drove the upside in the third-quarter earnings, which beat consensus estimates despite a slight revenue miss. Similar to the broadcasting giant’s rivals, many analysts expect CBS to look to book content licensing more evenly over this year and into 2017.

The Jefferies team sees the company as a big winner as viewership changes and cord cutting start to affect viewership. In fact they see a 10 million subscriber decline by 2015, and they believe that CBS remains a winner as re-transmission rates will continue to climb and offset the subscriber declines, especially at strong broadcast networks like CBS.

CBS shareholders are paid a 1.13% dividend. The Jefferies price target for the stock is $62. The Thomson/First Call consensus price target is set at $63. The stock closed most recently at $54.23 a share.
Freeport-McMoRan

This company has been absolutely crushed over the past five years, and it may indeed be a compelling value at current levels. Freeport-McMoRan Inc. (NYSE: FCX) is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. It is also the world’s largest publicly traded copper producer.

The company’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits. It has significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. Other assets include the Tenke Fungurume minerals district in the DRC, as well as significant U.S. oil and natural gas assets, principally in the Deepwater Gulf of Mexico and in California.

The company recently postponed an oil and gas spin off, and the market responded very positively. The company also has continued to shed assets and build up a solid cash position.

The Jefferies team notes that there’s been considerable market chatter over a Rio Tinto possible acquisition of the company. While there are situations that would need to be resolved to complete such a transaction, they think it could be an outstanding fit. They note that such a deal would lessen Rio Tinto’s exposure to iron ore, and increase the company’s exposure to copper.

Jefferies has a $15 price target on the stock, and the consensus price objective is lower at $10.91. Note that shares closed higher than that on Friday at $11.11.

Simon Property Group

This is one of the largest real estate investment trusts (REITs) and it boasts an outstanding market position. Simon Property Group Inc. (NYSE: SPG) invests in the real estate markets across the globe. It engages in investment, ownership, management and development of properties, primarily regional malls, premium outlets, mills and community/lifestyle centers. Through its subsidiary partnerships, it owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.

The company posted very solid first-quarter numbers and raised its outlook going forward.  The first-quarter funds from operations exceeded the consensus earnings per share estimate. Growth in operating income and new developments and expansions aided the results. Total revenue in the quarter increased 9.9% year over year, trouncing the consensus estimate.

While many fear the move away from brick-and-mortar stores, the Jefferies team notes that A level malls, many of which Simon’s owns, are exhibiting no signs of a slowdown in demand for high-quality mall space. With a lack of new supply coming, they see things shaping up nicely for this sector leader.

Simon Property investors are paid a 3.21% distribution. The $250 Jefferies price target compares with the consensus target of $228.95 and the $199.49 share price when trading ended on Friday.

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All three are compelling value stocks, with two being among the leaders in their respective sectors. These stocks make good sense for patient growth investors with a solid long-term time horizon.

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