Tech Dominates Top Jefferies Value Stocks to Buy

Technology

Published: February 4, 2016 8:25 am

Last Updated: January 13, 2020 1:39 pm

The relentless volatility that has marked 2016 so far is doing something only a market sell-off can do. Many top blue chip companies that have performed well over the years, and have also paid in some cases outstanding dividends, are being sold off to the point where the current valuations put them more in a value arena. For investors with fresh capital, or those selling losers, this could be the best entry point in some time to buy shares.

In the weekly report from Jefferies that highlights its top value picks, we found four companies that all have taken hits during the recent bouts of selling and make good sense for investors to consider now. All are rated Buy at Jefferies.

AT&T

AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

While shares are trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors has not only driven traffic, but increased device financing plans.

The company announced recently it is working with Salesforce.com to connect Internet of Things data from AT&T’s solutions into Salesforce’s Customer Success Platform. By connecting AT&T M2X into Salesforce’s Service Cloud, companies can automatically create and route service requests, cases or tickets through prebuilt workflows.

While fourth-quarter earnings were in line with forecasts, and slightly below the Jefferies estimates, a change in accounting for the entertainment group lowered revenue/EBITDA by $300 million for the quarter. The analysts note that this knocked $0.03 off the bottom-line numbers. So all in all, a solid quarter, and another reason for conservative accounts to own the stock, especially with solid DirecTV adds and mid-single-digit earnings growth estimated for 2016.

AT&T investors receive a huge 5.23% dividend. The Jefferies price target for the stock is $40, and the Thomson/First Call consensus price target is $37.24. Shares closed Wednesday at $36.72.