Blue Chips Dominate Jefferies Value Stocks to Buy

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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 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 reported solid second-quarter results, with license earnings below estimates but revenue from the cloud much higher. Some analysts feel fiscal 2016 will be a trough year for company in many ways, and they note 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 are paid a 1.5% dividend. Jefferies has $50 price target, and the consensus price objective is $43.82. The stock closed Wednesday at $40.01.

Teva Pharmaceuticals

This generic giant could be giving investors the best entry point in years. Teva Pharmaceuticals Industries Ltd. (NYSE: TEVA) is a leading global pharmaceutical company that delivers high-quality, patient-centric health care solutions. It is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,000 molecules to produce a wide range of generic products in nearly every therapeutic area. In specialty medicines, Teva has a world-leading position in innovative treatments for disorders of the central nervous system, including pain, as well as a strong portfolio of respiratory products.

The company integrates its generics and specialty capabilities in its global research and development division to create new ways of addressing unmet patient needs by combining drug development capabilities with devices, services and technologies.

The company acquired Allergan’s generic-drug business for $40.5 billion in cash and stock to bolster its position as the world’s largest maker of generic drugs. Combined with the largest generic pipeline in the United States, and the possibility that 2016 emerges as the inflection year for generic approvals, the stock makes good sense for more conservative investors.

Teva investors receive a 2.27% dividend. The $72 Jefferies price target is near the consensus target of $71.68. The stock closed Wednesday at $51.19.

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All these top value plays make good sense for more conservative accounts. With the volatility edging higher, investors may want to buy partial positions and look for a better entry point later this summer.