Investing

Jefferies Makes Another Huge 2017 Change to Franchise List Portfolio

Many of the top firms we cover here at 24/7 Wall St. are tweaking their high conviction stocks lists for 2017, and many are trying to take into account macro changes that could make a difference this year, such as higher inflation, a stronger dollar and rising interest rates. In addition, many are also trying to factor in positives like lower nominal tax rates and less of the ever burdensome regulations that some feel have stifled business.

In a new research report, Jefferies analysts are out with their second big change for 2017. They add Textron Inc. (NYSE: TXT), a leading aerospace and defense stock, to the Jefferies Franchise Picks list.

This stock joins the Franchise Picks list despite a weaker quarter, and Jefferies views the company as a true growth stock to buy for 2017. Textron is a multi-industrial conglomerate that has the following operating segments:

  1. Textron Aviation manufactures light-to-medium-sized aircraft.
  2. Bell comprises Bell Helicopter and Textron Systems.
  3. Industrial Products manufactures machinery and equipment for golf/turf, wire and cable installation systems, plastic fuel tanks (Kautex), pumps, gears and gearboxes.
  4. Textron Financial is a commercial lending operation that primarily provides equipment financing.

The analysts point out that the company has a very solid new product pipeline, and they feel the company is demonstrating that new products are the superior solution to combating tough end markets. The new product pipeline includes the Scorpion, Longitude, Denali, Hemisphere, V-280 and V-247.

Textron investors are paid a small 0.16% dividend. The Jefferies price target for the stock is $60. The Wall Street consensus target price is listed at $52.50. The stock ended last week at $48.68 a share.

We also screened the Franchise Picks portfolio for the top telecom and technology companies, and these three look like outstanding stocks to pick up now.

Alphabet

The search giant continues to expand, and it is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) provides online advertising services in the United States, the United Kingdom and rest of the world. It offers performance and brand advertising services, and it operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.

The Google segment also sells hardware products, comprising Chromecast, Chromebooks and Nexus. The Other Bets segment includes businesses such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives.

Some were initially disappointed when the Google-parent posted fourth-quarter earnings per Class A share, adjusted and excluding items, that fell short of the consensus estimate from Thomson Reuters. But revenues of about $26 billion topped expectations, and the company remains a sector leader.

Jefferies has a $1,000 price target for the stock, and the consensus target is $968.55. The shares closed on Friday at $845.03.