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Jefferies Stocks to Buy That Will Benefit from Macro and Micro Themes

Lee Jackson

As the stock market continues its 1990s style rally, investors continue to keep a very close eye on changing strategies. High dividend stocks have given way to dividend growth stocks. Portfolio managers are now scanning for stocks with high cash flow. Companies with upward revisions in earnings have shown the ability to post gains. In a new research report, Jefferies highlights those and other strategies designed to find stocks to buy for the rest of 2013. It also highlighted stocks that fit specific macro and micro themes. We then screened those stocks for the names with the top earnings, dividends and growth potential.

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SAIC Inc. (SAI) fits in to the sustainable income theme. The company provides scientific, engineering, systems integration and technical services and solutions in the areas of defense, health, energy, infrastructure, intelligence, surveillance, reconnaissance and cybersecurity to U.S. Department of Defense and other agencies. The Thomson/First Call price target for the stock is $13.50, which is below current trading levels. Investors are paid a tidy 3.2% dividend.

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Coach Inc. (COH) is a stock Jefferies feels may be a target of an leveraged buyout or an activist investor like Bill Ackman, seeking to unlock more value in the company. The consensus price target for this popular but volatile stock is $63, and investors receive a 2.3% dividend.

Deckers Outdoor Corp. (DECK) fits into Jefferies “wealth effect” theme category. The wealth effect is a condition generated by rising stocks markets, home prices and incomes, in most cases. Over the years, Deckers Outdoor Corp. has taken legions of short sellers out to the barn for a spanking. The consensus price target for the stock is $62.50.

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Golar LNG Ltd. (GLNG) is an interesting call, as Jefferies sees the company as a beneficiary of the soon to be huge liquid natural gas (LNG) export business. The company engages in the transportation, regasification and liquefaction, and trading of LNG. It is involved in the acquisition, ownership, operation and chartering of LNG carriers and floating storage regasification units, as well as in the development of LNG projects. The consensus price target for the stock is $45.50, and investors are paid a very solid 4.8% dividend.

Wells Fargo & Co. (WFC) fits into the Jefferies steepening yield curve theme. The yield curve typically steepens in an improving economy. Wells Fargo slowly but surely is becoming one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. It also remains a top Warren Buffett holding. The consensus target is at $46, and investors are paid a 2.8% dividend.

Home Depot Inc. (HD) falls into the improving payrolls theme. The company is a benefactor from both new home construction and home improvement, which benefit from job and payroll growth. The consensus price target for this top stock to buy is $85, and investors are paid a 2.0% dividend.

Norfolk Southern Corp. (NSC) shows up in the improving U.S. capital expenditures category. The logic here is that improved capex equals more product need and production, which will require transportation. The consensus price objective for this top railroad is $85, and investors receive a 2.8% dividend.

Pier 1 Imports Inc. (PIR) is one of the many stocks benefiting from the growth in U.S. housing. This retailer sells an eclectic mix of domestic goods primarily through its stores. In an age when millions of purchases are made online, Pier 1 stands apart as an old-school retailer. The consensus price target for the stock is $27. Investors are paid a small 0.9% dividend.

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As the stock market continues to grind higher in what many are starting to call an “ugly rally,” it is important for investors to remember a very simple stock market rule. Nobody ever went broke taking a profit. Review your portfolio for names that may be fully valued, and look for new avenues for growth and profit. The Jefferies macro and micro theme ideas may be a good place to start.

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