Jefferies says these value stocks will catch up the most as economy reopens

New York Stock Exchange (NYSE) building is seen with the Fearless Girl Statue during Covid-19 pandemic in Lower Manhattan, New York City, United States on May 26, 2020.
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Jefferies found a number of cheap stocks it believes are poised to outperform as the economy emerges from the coronavirus crisis.

The bank believes the stage is set for certain value stocks to participate in the market rebound in a big way. One of the catalysts for the potential outperformance: The recent rally in growth stocks has stretched their valuation to historic levels compared to value names, which signals a rotation in leadership ahead, Jefferies said.

"Valuation gap between growth and value at record high levels," Desh Peramunetilleke, global head of microstrategy at Jefferies, said in a note. "The most supportive argument in favor of value over quality/growth is the record high valuation dispersion between the two baskets."