Value and growth investments are important concepts for investors. Typically, if you’re value-minded, you’re looking for undervalued value stocks that have recently fallen out of favor. On the other hand, if you are growth-minded, look for companies with high sales, earnings, or cash flow growth.
Market experts and academics are constantly debating whether value investing or growth investing is more profitable. Ultimately, however, many agree that a diversified portfolio with both offers the strongest results in the long run.
In this article, however, I’m going to focus on the value side of investing. InvestorPlace – Stock market news, stock advice and trading tips
You probably know Warren Buffett as one of the most famous value investors of all time. In 1965, Buffett took ownership of Berkshire Hathaway (NYSE: BRK.A, NYSE: BRK.B), a struggling group of textile companies. Now it has its highest share price ever at $ 336.00 per share.
Investors should look carefully for their own value propositions. Research led by Kewei Hou of the National Bureau of Economic Research (NBER) shows where to start:
“The basic philosophy [of value investing] is to invest in undervalued securities that are sold well below their intrinsic value. The intrinsic value of a security is, in turn, the value that can be justified by the issuer’s earnings, dividends, assets and other closing information. ”
Of course, not every cheap stock offers value. Hence, investors need to carefully consider stocks when looking for a long term game. These stocks are usually well-established companies with steady growth, profits, and cash flow. Many also pay dividends. In addition, the recent decline in the price of a Value stock is often short-term – a response to a loss of profit or the departure of a CEO.
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With that said, here are seven value stocks that should be worth looking at in November:
Albertsons (NYSE: ACI)
AT&T (NYSE: T)
Beazer Homes (NYSE: BZH)
Centene (NYSE: CNC)
Ingredient (NYSE: INGR)
iShares MSCI EAFE Value ETF (BATS: EFV)
Vanguard S&P 500 Value Index Fund (NYSEARCA: VOOV) ETF stocks
Value to buy stocks: Albertsons (ACI)
52-week range: $ 12.91 – $ 16.50 Dividend yield: 2.6% Year-to-date change: – 2.1%
Headquartered in Boise, Idaho, Albertsons is one of the leading grocery chains in the United States. The company currently has 2,250 stores in 35 states and the District of Columbia. In addition, over 1,700 of these stores have pharmacies. The company even operates around 400 filling stations.
You’ve probably shopped at Albertsons before – this includes brands like Safeway and Shaw’s, among others. The company also owns the meal kit company Plated. In the past few months, management has also worked hard to expand its e-commerce presence. Albertsons currently ranks 55th on the Fortune 500 list.
At the end of October, Albertsons released its second quarter results. Revenue of $ 15.8 billion was an 11.2% increase over the previous year. The gross profit margin also increased slightly to 29% compared to the second quarter of 2019.
Investors also enjoyed adjusted net income of over $ 356 million. That was 60 cents per share. A year ago, the metric was 17 cents per share at just over $ 99 million.
Now the price-to-earnings (P / E) and price-to-sales (P / S) ratios of ACI stock are 9.37 and 0.11, respectively. And the company just went public this year. So watch these picks of value stocks – their stocks deserve to be on every investor’s radar.
AT & T (T)
Source: Jonathan Weiss / Shutterstock
52-week range: $ 26.08 – $ 39.70 Dividend yield: 7.2% Year-to-date change: – 26.75%
Of course, AT&T needs little introduction. The multinational conglomerate offers a wide range of media, entertainment, telecommunications and technology services. That alone sets it apart from other value stocks.
However, it was a difficult year for AT&T. The pandemic meant the closure of cinemas, the cancellation of many high-turnover sporting events, and much more. That, of course, hurt the T-Share.
However, in October the company released third quarter results that showed some promising upside. Revenue of $ 42.3 billion beat estimates and free cash flow was $ 8.3 billion. Only the adjusted earnings per share (EPS) of AT&T amounted to 76 cents after 94 cents in the previous year. Management blamed Covid-19 for the decline.
Despite the EPS disappointment, analysts were pleased to hear the company billed 645,000 new phone customers with recurring monthly bills. In the US, the group had 38 million subscribers for both HBO and HBO Max, beating the year-end target of 36 million. Additionally, HBO’s worldwide subscriber numbers now stand at 57 million. Commenting on the results, CEO John Stankey said:
“Our strong cash flow for the quarter enables us to continue investing in our growth areas and reducing debt. We now expect free cash flow of $ 26 billion or more in 2020 with a dividend payout ratio for the full year in the high 50s. ”
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Currently, the forward P / E and P / S ratios of AT&T shares are 8.94 and 1.19, respectively. Needless to say, passive income investors are likely to find value in this company’s stocks.
Beazer Homes (BZH)
52 week Range: $ 4.39 – $ 17.23 Dividend Yield: N / AYTD Change: 2.2%
Beazer Homes, an Atlanta-based home builder, is next on my list of value stocks. You may be familiar with the homes that are being sold under the Beazer, Gatherings, and Choice Plans names. The BZH share has been listed on the New York Stock Exchange since 1994.
The company announced the results of the third quarter for the 2020 financial year back in July. Home construction revenue increased 10.4% year over year to over $ 532 million. Additionally, Beazer’s net income for operations was $ 15.3 million compared to $ 11.6 million a year ago. Investors found that with sufficient liquidity, the company’s balance sheet was strong.
In late September, management also released preliminary operating results for the fourth quarter. Incoming orders in the first two months of the company’s fourth fiscal quarter increased 37% year over year.
Currently the Beazer’s forward P / E is 2.44 and the P / S ratio is 0.18. Given its solid financial data, potential investors should study the metrics and consider investing new capital in BZH shares.
52 week Range: $ 43.96 – $ 74.70 Dividend Yield: N / AYTD Change: 9.53%
Centene is a health plans provider focused on government sponsored health programs like Medicaid, the Affordable Care Act (ACA), and military plans. Over the years the company has grown both organically and through acquisitions. In fact, it now ranks 42nd on the Fortune 500 list, making it one of the most notable stocks of value.
Centene released its third quarter results in late October. Revenue was just over $ 29.1 billion, up 53% year over year. Adjusted diluted EPS was $ 1.26. A year ago it was 96 cents. In addition, CNC’s Managed Care memberships rose to 25.2 million, a 65% increase over the previous year. Obviously, the pandemic has been a huge contributor to membership growth.
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Currently, CNC stock has a forward P / E and P / S ratio of 12.29 and 0.36, respectively. Additionally, with the introduction of a new administration in the White House, this health insurer’s stocks are likely to receive more favorable exposure in the near future. Investors should take note of this.
52-week range: $ 59.11 – $ 99.51 Dividend yield: 3.5% Year-to-date change: – 21.5%
Next on my list of value stocks is Ingredion, a supplier of – you guessed it – ingredients.
Headquartered in Illinois, the company operates in the food, beverage, brewing, and biopharmaceutical industries. In a way, Ingredion really is an all-rounder. The global manufacturer takes raw materials such as fruits, vegetables and grains and converts them into ingredients with added value that are used across industries.
Ingredion released Q3 metrics in early November. Net sales of $ 1.5 billion represented a 5% decrease year over year and net income of over $ 92 million, or $ 1.37 per share. A year ago it was $ 99 million, or $ 1.48 per share. Management stated that this “decrease was due to currency effects in South America and lower sales volumes in North America”.
However, CEO Jim Zallie also said in the press release, “Reported and adjusted operating income increased 35% and 41%, respectively, from the second quarter. Our intense focus on customer care and operational execution enabled us to achieve year-over-year earnings growth in most of our regions. ”
The INGR share’s forward P / E and P / S ratios are 11.42 and 0.82, respectively. Value investors should therefore seek to buy the slumps in the company’s stock. With a Covid-19 vaccine on the horizon, restrictions are likely to be relaxed and consumer activity outside the home increased in the coming months. This means the stock has a potential plus.
iShares MSCI EAFE Value ETF (EFV)
52 Week Range: $ 30.26 – $ 50.95 Dividend Yield: 3.7% Year Started: -10.9% Expense Ratio: 0.39% or $ 39 for every $ 10,000 invested annually
Our next discussion on my list of value stocks revolves around an exchange traded fund (ETF) – the iShares MSCI EAFE Value ETF.
This ETF has an overseas focus. It provides access to a number of companies in Europe, Australia, Asia and the Far East that fund managers consider undervalued. The fund traded in 2005.
EFV – with 546 holdings – tracks the MSCI EAFE Value Index. The top 10 positions account for just over 15% of their net worth of $ 5.39 billion. At the top of the fund’s list of companies are Switzerland-based biopharmaceutical giant Novartis (NYSE: NVS), Japanese automaker Toyota Motor (NYSE: TM), and French healthcare group Sanofi (NASDAQ: SNY). With names like the ETF, investors should be comforted.
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In addition, the average trailing PER and the average PER of the EFV share are 14.53 and 0.94, respectively. Therefore, those value investors considering diversifying outside of the US should keep an eye on this fund.
Vanguard S&P 500 Value Index Fund (VOOV) ETF stocks
52-week range: $ 78.30 – $ 127.43 Dividend yield: 2.6% Year-to-date change: – 5.89% Expense ratio: 0.1%
My final pick for this list of value stocks is another ETF, the ETF stocks of the Vanguard S&P 500 Value Index Fund. The fund provides access to 391 value companies within the S&P 500 and was traded in 2010.
What makes VOOV interesting? The ETF’s top 10 positions account for over 20% of net assets of $ 1.4 billion. These include Warren Buffet’s own Berkshire Hathaway, UnitedHealth (NYSE: UNH), Verizon Communications (NYSE: VZ), and Johnson & Johnson (NYSE: JNJ) – all top names in their field.
The trailing PER and PER of the VOOV share is 19.02 and 1.97. Of course, the ETF looks promising. With the recent surge in broader markets, potential long-term investors may want to wait for a short-term decline before entering the fund.
At the time of publication, Tezcan Gecgil had both long and short positions in ACI stocks.
Tezcan Gecgil has been involved in investment management in the US and UK for over two decades. In addition to formal college education in the field, she has completed all three levels of the Chartered Market Technician (CMT) exam. Her passion is options trading, which is based on the technical analysis of fundamentally strong companies. She especially likes setting up covered calls to generate income on a weekly basis.
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