The Jefferies roster of mostly small-cap picks includes stocks that its strategists screened for strong momentum and attractive valuations.
Jefferies strategists have put together a list of mostly small-cap stocks that have strong momentum and are trading at attractive valuations.
The strategists, led by Steven DeSanctis, don’t see small-cap growth stocks as appealing.
“We sliced ‘growth’ stocks into a few buckets and found that, despite having been hammered, they are not cheap,” the strategists wrote in a commentary cited by MarketWatch.
“The underperformance ranks as some of the darkest these stocks have seen since ’00, but they tend to take time to rebound.”
So the strategists came up with the investment firm’s list, using momentum and valuation as screens. “Valuations have been a real driver of performance, while momentum has been gaining momentum,” they said.
The non-small-cap stocks on the list include Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report, KeyCorp (KEY) – Get KeyCorp Report and Advance Auto Parts (AAP) – Get Advance Auto Parts, Inc. Report.
The small-caps include Conn’s (CONN) – Get Conn’s, Inc. Report, a home-goods retailer; Green Plains (GPRE) – Get Green Plains Inc. Report, an ethanol producer; Virtu Financial (VIRT) – Get Virtu Financial, Inc. Class A Report, which provides securities trading execution; and Community Health Systems (CYH) – Get Community Health Systems, Inc. Report, which operates acute care hospitals.
As for Delta Air, Morningstar analyst Burkett Huey is bullish on the Atlanta carrier, too. He puts fair value at $57, compared with its recent price of $43.88.
“We think Delta is the highest-quality legacy carrier because it has been able to attract high-yielding business travelers through its product segmentation and credit card partnerships, primarily with American Express,” (AXP) – Get American Express Company Report he wrote in a commentary last month.
“Delta’s five-cabin segmentation strategy allows high-spending travelers to purchase premium options when they are able to.”
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