After years of relatively benign volatility, investors are getting a taste of something they are not very accustomed to. The Volatility Index (VIX) has been elevated since the start of the trading year, and with China, oil and other issues still stirring the pot, this could be the norm for the near future. One good idea is for investors to consider adding value stocks to their portfolios.
Each week we cover the new value calls from the analysts at Jefferies, and increasingly, some of the calls may look surprising as some solid big blue chips companies are becoming so cheap on a multiple basis they are ending up in the value arena. This is the best of both worlds for investors when large cap growth companies become inexpensive enough to have a value call.
This top consumer food stock makes sense for more conservative investors. Dean Foods Co. (NYSE: DF) is a food and beverage company that processes and distributes milk and other dairy and dairy case products in the United States. The company manufactures, markets and distributes various branded and private label dairy case products, such as fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products, as well as juices, teas, bottled water and other products.
Dean Foods offers its products under approximately 50 national, regional and local proprietary or licensed brands, and private labels, including DairyPure, TruMoo, Alta Dena, Berkeley Farms, Country Fresh, Dean’s, Garelick Farms, Land O’Lakes, Lehigh Valley Dairy Farms, Mayfield, McArthur, Meadow Gold, Oak Farms, PET, T.G. Lee, Tuscan and others, and it is a top Jefferies food products pick for the rest of 2016.
Shareholders are paid a 1.9% dividend. The Jefferies price target for the stock is $23, and the Thomson/First Call consensus target is $20.70. The stock closed Thursday at $18.94.
Energy Transfer Equity
This company was trying to merge with Williams Energy but the deal looks to be falling through, despite the approval of the U.S. Federal Trade Commission. Energy Transfer Equity L.P. (NYSE: ETE) provides diversified energy-related services in the Unites States. It owns and operates approximately 7,700 miles of natural gas transportation pipelines and three natural gas storage facilities located in the state of Texas, as well as approximately 12,800 miles of interstate natural gas pipeline. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users and other marketing companies.
Jefferies likes the stock as a solid natural gas play, and with the summer heat already upon great swaths of the country, the power companies may be using more and more natural gas as demand spikes as the air-conditioning works overtime.
Investors receive a solid 7.47% distribution. The Jefferies price target recently was raised to $17 from $15, and the consensus target is posted at $16.36. Shares closed most recently at $15.28 apiece.