Jefferies Makes Huge Q4 Addition to Franchise Picks Stock List


This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company, with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.

The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some on Wall Street estimate that the company will have a compound annual growth rate of over 5% for the next five years.

Many on Wall Street feel that, with Permian production and asset disposals targets reset, the company can raise the dividend 20% and buyback 15% of shares. Many analysts view the strategy update as appropriately conservative for one of the more oil-levered majors. The Chevron strategy through 2020 is focused on discipline, enabled by step change in capital efficiency driven by doubling Permian production.

Jefferies feels that the company presents to investors the most advantaged portfolio in the sector. A strong growth profile is driven by high-margin projects tied to oil prices. Australian LNG and Tengiz are essentially no-decline assets and underpin financial performance. An industry-leading Permian Basin position provides short cycle investment opportunities to 2030 and beyond.

Chevron shareholders receive an outstanding 3.79% dividend. The $157 Jefferies price target is well above the consensus price target of $146.23. The shares closed most recently at $117.21.


This top midcap bank makes good sense for the fourth quarter and 2019. KeyCorp (NYSE: KEY) operates as the bank holding company for KeyBank National Association, which provides deposit, lending, cash management and investment services to individuals, small and medium-sized businesses.

The company also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets banner.

The top managers are attracted to the larger regional banks, as valuations look very reasonable and cost-saving plans are helping to make forward estimates look very achievable. With overall credit remaining solid, earnings and loan deposit and fee growth all are positive metrics for the bank.

KeyCorp investors receive a 2.80% dividend. Jefferies has set its price target at $23. The consensus target is $22.68, and shares closed Monday at $17.25.

Williams Companies

This top energy company was added to the Jefferies Franchise Pick list of top stocks to buy in the summer. Williams Companies Inc. (NYSE: WMB) is now largely a pure-play domestic natural gas infrastructure company that has a 74% ownership interest in its underlying master limited partnership, Williams Partners. Shareholders will vote on a complete merger on August 9, and soon after that, most believe the Williams Partners deal will close.

The company has a lower risk, fee-based business model with some volume sensitivity. Natural gas demand continues to be driven by LNG exports, power generation and industrial needs. In addition to steady demand growth, Marcellus production and associated gas in the Permian are expected to continue to be primary supply drivers.

Shareholders receive a very sizable 5.10% dividend. The Jefferies price target is $34. The consensus target is $33.71, and the shares ended Monday at $26.28.

One new addition to the Franchise Picks list, and four large-cap growth stocks that all pay reliable dividends. Given the recent volatility and selling, all have backed up to much more reasonable entry points.

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