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Jefferies Makes Another Big Summer Change to Its Franchise Picks List

With the second-quarter earnings reporting almost over, and the second half of 2016 well underway, many of the top firms we follow on Wall Street are making some changes to the lists of their high conviction stock picks for clients. With the market bursting through to new all-time highs, it makes sense to examine the lists and make some changes, as the rest of the year could have additional volatility due to the political cycle.

In a recent research note, the analysts at Jefferies made a big move by adding Ball Corp. (NYSE: BLL), a top consumer goods company in packaging and containers, to the firm’s well-respected Franchise Picks list of stocks to buy. Here we cover this new addition, and the company it replaced, and we also screened the Franchise Picks list for the highest dividend-paying stocks in the group.

Ball was added to the list and Jefferies sees it as a solid defensive play. With pro-forma sales of approximately $11 billion in 2015, Ball is a leading global supplier of metal packaging products, primarily for the beverage and food industries. In beverage cans, Ball produces roughly 100 billion units globally, with the leading market position in every major geographic area it serves. Ball also has a long-standing Aerospace and Technologies segment.

The company posted very solid second-quarter numbers that beat Wall Street estimates, and Jefferies also feels there’s upside to the company’s 2017 free-cash-flow guidance. Some on Wall Street think Ball can have as much as $1 billion in free cash flow by 2019.

The stock has been on fire as short sellers have raced to get out. Stronger than expected packaging growth drove the earnings surprises, and the contracted backlog has grown to more than $1 billion by the end of the second quarter.

WestRock Co. (NYSE: WRK) is the company removed from the Franchise Picks list, but is still a favorite at Jefferies and stays Buy rated. The old Rock-Tenn and MeadWestvaco have merged to become the second-largest U.S. packaging company, valued at $10.7 billion, trailing only...