Jefferies Picks 10 Low-Stress Stocks for a Choppy Summer

Jefferies told clients to own quality stocks with low momentum through a summer that could get choppy. The trigger is AI.

The note from Desh Peramunetilleke, head of quantitative strategy, flags three AI-related risks: potential overcapacity, the profit outcome from an estimated $700 billion in hyperscaler capital spending, and rising token costs – the fees paid to AI models.

The S&P 500 momentum index has beaten the broader market by more than 70% since 2024, a gap Peramunetilleke compared to the dot-com run of the 1990s. Before the outbreak of war with Iran, momentum strategies included materials and defense stocks. Now AI alone is carrying the weight, "increasing the risk of an unwind on adverse sentiment," he wrote Monday.

"While we still see the theme as a long-term winner, the above reasons could drive an unwinding of the AI-led momentum," Peramunetilleke said.

His team screened for companies with a high quality score, market values above $10 billion, solid fundamentals, and long-term free cash flow yields above 3%. The group also had to show limited momentum and trade below 20 times expected forward earnings.

Ten stocks made the cut. Two stand out for their cash flow and growth mix.

AbbVie scored Jefferies' top quality score. The drugmaker is expected to deliver compound annual earnings growth of nearly 28% in 2026-2027, with a free cash flow yield of 5.2%. First-quarter revenue hit $15 billion, led by a $7.3 billion immunology portfolio. Last week AbbVie agreed to buy Apogee Therapeutics for $10.9 billion, its largest acquisition in more than five years, to strengthen next-gen immunology. The stock has climbed 25% in three months and 37% over the past year. It yields 2.7%. Second-quarter results are due July 31.

Netflix, with a $320 billion market cap and a 3.6% free cash flow yield, also earned a high quality score. The streaming platform forecast 13% second-quarter revenue growth, though it warned content spending would be front-loaded because of title launch timing. Shares fell 10% in mid-April after second-quarter guidance missed Wall Street expectations and full-year forecasts were left unchanged. The stock is down 18% in 2026 and almost 41% lower over the past 12 months. Results are due July 16.

Other names on the list include Lowe's Companies, McDonald's, and American Express. American Express carries an Alpha Score of 55 out of 100 from AlphaScala, a Moderate rating in the Financials sector.