Investing

5 Jefferies Franchise Picks to Buy With Virtually No Foreign Tariff Exposure

Eldorado Resorts

This gaming and hospitality company has a diverse property portfolio, with casinos and resort stretched across the country. Eldorado Resorts Inc. (NYSE: ERI) owns and operates gaming facilities located in Ohio, Louisiana, Nevada, Pennsylvania and West Virginia.

The company owns and operates approximately 503,000 square feet of casino space with approximately 20,000 slot machines and video lottery terminals, more than 550 table and poker games, 45 restaurants and 6,500 hotel rooms. As of December 31, 2016, it owned and operated various properties, including Eldorado Resort Casino Reno; Silver Legacy Resort Casino; Circus Circus Reno; Eldorado Resort Casino Shreveport; Mountaineer Casino, Racetrack & Resort; Presque Isle Downs & Casino; and Eldorado Gaming Scioto Downs.

The company also reported a strong quarter with earnings growth and cost savings among the highlights for investors. Many analysts cite the casinos’ proximity to the red-hot Reno and Blackhawk markets as a big positive.

The $57 Jefferies price objective is near the $56.75 consensus target. The stock closed at $48.27 on Friday.

Extended Stay

This lodging company is a solid pick, especially when people are moving around the country for new job opportunities. Extended Stay America Inc. (NASDAQ: STAY) is one of the largest owner/operators of extended stay hotel properties in the United States, encompassing 21% of the extended stay segment and 1.5% of U.S. room supply. Given the offerings available at the company’s hotels, the top line is driven all by room revenues rather than ancillary spend, which creates property-level margins significantly above competitors.

The company reported solid first-quarter results and reaffirmed guidance of $1.2 billion to $1.5 billion for the rest of 2019. In addition, the company raised the dividend from $0.22 to $0.23 per share, or a 5.07% yield. With operating margins at a healthy 50.1%, the stock makes sense for conservative accounts.

Jefferies has set its price target at $26, The consensus target is $21.36, and the stock was last seen at $18.15.

KeyCorp

This midcap bank makes good sense for the rest of 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.

Jefferies remains bullish on the stock and said this earlier this year:

We believe KEY has the potential to become a higher growth story, driven by synergies related to its acquisition of First Niagara in 2015, and recently elevated business investment. The bank has an attractive valuation, trading at a ~2x discount to its peer average on consensus price to earnings.

KeyCorp investors receive a 3.93% dividend. The Jefferies target is $18. The consensus target is $19.314, and shares closed at $17.30.

These five companies get almost 100% of their revenues from in the United States, and they have little if any exposure to foreign imports that may be subject to tariffs. These top stocks to Buy at Jefferies make sense for accounts looking for growth but with lower risk.

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