Despite last Friday’s meager payroll gains, most of Wall Street seems to be taking the low number as an anomaly and looking at overall brighter economic news. That was the case as the market bounced back sharply this week, as it now appears that the Federal Reserve may wait until July to lift rates. Either way, the rates will be raised, and it makes good sense now to look at the top value ideas.
Every week the analysts at Jefferies come out with top value picks for their clients, and this week’s companies are a solid collection of well-established firms that not only hold solid upside potential, but look fairly insulated from a huge drop if the market reverses. All are rated Buy at Jefferies.
This is a company that Jefferies feels reported solid numbers and new business is growing faster than renewals. CA Inc. (NASDAQ: CA) provides information technology (IT) management software and solutions that help organizations plan, develop, manage and secure applications and IT infrastructure in the United States and internationally.
The better-than-expected fiscal fourth-quarter earnings were accompanied by guidance that was also better than expected. While revenue was slightly lower than last year, it also came in higher than expected.
The Jefferies analysts feel that with growth outpacing renewals, which is a requirement for revenue growth, their main thesis on the company has been that the stock is not priced for growth, having little downside if it does no achieve growth, but good upside if it does, and this has played out well since last fall. The analysts continue to like the overall total return potential.
CA investors receive a 3.12% dividend. The Jefferies price target for the stock is $36, but the Thomson/First Call consensus target is $31.70. Shares closed above that level, at $32.74, on Tuesday.
Some feel this top company would be an outstanding addition to a networking giant as a takeover candidate. Infinera Corp. (NASDAQ: INFN) provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and simplify optical network operations. Infinera’s end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. Infinera’s unique large-scale photonic integrated circuits enable innovative optical networking solutions for the most demanding networks.
Alphabet’s recent announcement that it will be adding 12 new data center regions is a definite positive for Infinera. The company also has a 9% share of the automotive chip market, which continues to provide additional tailwind for earnings growth. Jefferies recently met with the CEO Thomas Fallon, and he highlighted the opportunity in wireless backhaul and fronthaul applications as they expect operators will need up to 10 gigabits of capacity per antenna over time.
Jefferies has an $18 price target, and the consensus price objective is $18.33. Shares closed most recently at $13.26.