In this article, we discuss the 15 best value stocks to invest in. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Value Stocks to Invest In.
Fears of inflation have hit the stock market in the past few weeks as the demand for goods and services rises and results in shortages, leading to pricing wars across the globe. In addition to the increased demand, the reopening of the economy after the year-long coronavirus lockdowns has also impacted the smooth movement of materials from one place to another, leading to supply chain problems and further aggravating the pricing situation. As a result, investors are turning to value stocks to diversify their growth-focused portfolios.
Between 1930 and 2010, value stocks outperformed growth stocks by an annual margin of 4-5 percentage points. That’s why there is a large cohort of value investors, including Warren Buffett, who are devoted to this investment strategy. Things changed dramatically over the last 10 years, growth stocks outperforming value stocks by more than 100 percentage points cumulatively. Russell 2000 Growth ETF also returned 105% over the last 5 years, beating the Russell 2000 Value ETF by 49 percentage points. Since February of this year though Russell 2000 Value ETF outperformed the Russell 2000 Growth ETF by 15 percentage points. Value investors are hopeful that this may be the beginning of another chapter where mean reversion leads to value outperforming growth stocks for several years. That’s why we decided to take a look at the best value stocks to invest in right now.
Some of the popular value stocks on the market in the United States include Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM), among others. These firms have historically delivered solid earnings and remained relatively immune from economic recessions over the past few years, mostly because of the competitive edge of their products and services over peers in the open marketplace.
Value investing seems to be gaining traction as growth stocks undergo a period of turmoil. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 29th 2021 our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 15 best value stocks to invest in. These were ranked keeping in mind the size of the company, the price to earnings ratio, hedge fund sentiment, analyst ratings, and basic business fundamentals.
Best Value Stocks to Invest In
15. Barrick Gold Corporation (NYSE: GOLD)
Number of Hedge Fund Holders: 49
PE Ratio: 14.90
Barrick Gold Corporation (NYSE: GOLD) is a Canadian mining firm with interests in copper and gold, among other metals. It is placed fifteenth on our list of 15 best value stocks to invest in. The company’s shares have returned 0.44% to investors over the past week. On July 15, the firm announced that it was on track to meet production targets for the full-year, reporting that it had produced 1.04 million oz of gold in the second quarter. The firm has a market cap of over $36 billion and posted $12.6 billion in revenue last year.
On July 16, investment advisory National Bank maintained an Outperform rating on Barrick Gold Corporation (NYSE: GOLD) stock but lowered the price target from C$39 to C$38. Mike Parkin, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, investment firm First Eagle Investment Management is a leading shareholder in Barrick Gold Corporation (NYSE: GOLD) with 27 million shares worth more than $534 million.
Just like Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM), Barrick Gold Corporation (NYSE: GOLD) is one of the best value stocks to invest in.
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and Barrick Gold Corporation (NYSE: GOLD) was one of them. Here is what the fund said:
“Barrick’s recent results have been consistent with our expectations. Barrick has begun inching up the dividend as planned, which should continue increasing absent them finding a large acquisition (they want more copper assets) or a materially lower price of gold. We’d also expect periodic special dividends during stronger gold price environments. At current gold prices we estimate normalized free cash flow at Barrick of over $1.60/share. The company is now about net-debt free. We see plenty of upside and absent a collapse in gold not too much downside. Missing from much of the public discussions about gold, but potentially interesting, is the supply/demand backdrop. As the Wall Street Journal (8/16/20) recently said “gold is amongst the rarest metals in the earth’s crust and much of the easier to get to ore has already been mined. What is left is harder to find and more expensive to extract…” According to the World Platinum Council, it was forecasted that there will be a supply and demand imbalance of 1.2 million ounces globally. The potential macro tailwinds that could add value to an alternate currency like gold including currency concerns, excessive debt and continuing negative real interest rates are still out there. While the shares performed well for the year they were weak in the second half and now stand more attractively priced.”
14. ING Groep N.V. (NYSE: ING)
Number of Hedge Fund Holders: 10
PE Ratio: 14.50
ING Groep N.V. (NYSE: ING) stock has returned 67% to investors over the past twelve months. It is ranked fourteenth on our list of 15 best value stocks to invest in. The firm is based in the Netherlands and markets banking services. In earnings results for the first quarter, posted on May 6, the firm reported a net income of €1.01 billion, compared to. €670 million over the same period last year. The total income for the first quarter was $4.7 billion, up more than 4% year-on-year and beating market estimates by $260 million.
On July 9, investment advisory UBS maintained a Buy rating on ING Groep N.V. (NYSE: ING) stock and raised the price target to EUR 12 from EUR 11.70. Johan Ekblom, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in ING Groep N.V. (NYSE: ING) with 41.7 million shares worth more than $510 million.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and ING Groep N.V. (NYSE: ING) was one of them. Here is what the fund said:
“ING is a multinational bank based in the Netherlands. It operates across Europe, with its largest economic exposures in the Benelux and Germany. The stock began 2021 with an extraordinarily cheap valuation as investors fretted about potential credit losses from the pandemic. Fortunately, ING is very well-capitalized and growing modestly. General economic optimism due to the rollout of vaccines led bank stocks to rally. It’s common for high-quality companies, like ING, to lead a sector rally, and the stock was up almost 38% in euros in the first quarter. The stock currently trades well below tangible book value and remains meaningfully undervalued.”
13. ArcelorMittal (NYSE: MT)
Number of Hedge Fund Holders: 21
PE Ratio: 14.20
ArcelorMittal (NYSE: MT) is placed thirteenth on our list of 15 best value stocks to invest in. The company’s shares have returned 179% to investors over the past year. The company operates in the steel and mining business and is based in Luxembourg. On July 13, the firm announced that it had signed an understanding with the government in Spain to build the first zero carbon steel plant in the world. The firm revealed that the total cost of setting up the facility would lie around $1.2 billion.
On July 14, investment advisory Barclays initiated coverage of ArcelorMittal (NYSE: MT) stock with an Overweight rating and a price target of EUR 36, highlighting a positive outlook for European steel makers in the coming twelve months.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $709 million in ArcelorMittal (NYSE: MT), up from 18 in the preceding quarter worth $511 million.
Alongside Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM), ArcelorMittal (NYSE: MT) is one of the best value stocks to invest in.
12. Ford Motor Company (NYSE: F)
Number of Hedge Fund Holders: 49
PE Ratio: 13.9
Ford Motor Company (NYSE: F) stock has offered investors returns exceeding 99% over the course of the past year. It is ranked twelfth on our list of 15 best value stocks to invest in. The firm makes and sells automotives and is based in Michigan. Some of the products it markets include trucks, cars, sport utility vehicles, electric vehicles, and luxury vehicles, among others. On July 13, the firm announced that it would be partnering with ride hailing firm Lyft and Argo AI for an autonomous vehicle fleet that is set to hit the streets with human backup drivers the next year before going fully autonomous in the months after the launch..
On July 16, investment advisory Bank of America maintained a Buy rating on Ford Motor Company (NYSE: F) stock and raised the price target to $18 from $17, underlining that the firm was expected to beat market estimates for earnings in the second quarter.
At the end of the first quarter of 2021, 49 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Ford Motor Company (NYSE: F), up from 41 in the preceding quarter worth $1.6 billion.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE: F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
11. Franklin Resources, Inc. (NYSE: BEN)
Number of Hedge Fund Holders: 31
PE Ratio: 13.63
Franklin Resources, Inc. (NYSE: BEN) is a California-based asset management holding company. It is placed eleventh on our list of 15 best value stocks to invest in. The company’s shares have offered investors returns exceeding 39% over the course of the past twelve months. In earnings results for the second quarter, posted on May 4, the firm reported earnings per share of $0.79, beating market estimates by $0.04. The revenue over the period was more than $2 billion, up over 58% year-on-year.
On May 5, investment advisory Deutsche Bank maintained a Hold rating on Franklin Resources, Inc. (NYSE: BEN) stock but raised the price target to $33 from $29. The ratings update was issued following encouraging earnings results for the first quarter.
At the end of the first quarter of 2021, 31 hedge funds in the database of Insider Monkey held stakes worth $198 million in Franklin Resources, Inc. (NYSE: BEN), down from 33 in the previous quarter worth $268 million.
In addition to Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM), Franklin Resources, Inc. (NYSE: BEN) is one of the best value stocks to invest in.
10. State Street Corporation (NYSE: STT)
Number of Hedge Fund Holders: 32
PE Ratio: 13.60
State Street Corporation (NYSE: STT) is ranked tenth on our list of 15 best value stocks to invest in. The stock has returned 35% to investors over the past year. The company markets financial services and is based in Boston. In earnings results for the second quarter, posted on July 16, the firm reported earnings per share of $1.97, beating market estimates by $0.17. The revenue over the period was over $3 billion, up more than 3% year-on-year and beating market predictions by $80 million.
On July 19, investment advisory Deutsche Bank maintained a Buy rating on State Street Corporation (NYSE: STT) stock and raised the price target to $105 from $104. The ratings update was issued following strong quarterly results posted by the firm.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $866 million in State Street Corporation (NYSE: STT), up from 31 in the previous quarter worth $502 million.
9. Chubb Limited (NYSE: CB)
Number of Hedge Fund Holders: 41
PE Ratio: 13.55
Chubb Limited (NYSE: CB) is an insurance company based in Switzerland. It is placed ninth on our list of 15 best value stocks to invest in. The company’s shares have returned 26% to investors over the past twelve months. On April 27, the firm posted earnings for the first quarter, reporting earnings per share of $2.52, beating market predictions by $0.03. The net premium over the period was more than $8.2 billion, up 5.5% compared to the net premium over the same period last year and beating market estimates by $490 million.
On July 12, investment advisory Deutsche Bank reiterated a Buy rating on Chubb Limited (NYSE: CB) stock, raising the price target to $170 from $142, underlining confidence in the company ahead of the release of quarterly earnings results.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Chubb Limited (NYSE: CB), up from 34 the preceding quarter worth $1.1 billion.
Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM) are some of the best value stocks to invest in, just like Chubb Limited (NYSE: CB).
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Chubb Limited (NYSE: CB) was one of them. Here is what the fund said:
“Chubb is now among the Fund’s largest P&C holdings at 5.2% and illustrates well why we thought there was an opportunity to add to our P&C names. Through September 30, 2020, Chubb had returned −24% for the year, reflecting investors’ fears that (1) the insurance industry would be compelled to cover substantial business interruption claims that were never intended as part of insured’s policies, (2) declining long-term rates would diminish the value of “float” (i.e., customers’ funds that insurers get to hold and invest until claims are paid), and (3) adverse trends (pre-dating the pandemic) in insured loss rates (e.g., rising litigation and settlement costs, increased frequency and severity of catastrophe losses, etc.).
With industry economics already soft, it was only a matter of time before insurance pricing would have to adjust. In fact, P&C pricing had already begun to increase in a number of business lines before COVID hit, and that trend has only increased and broadened since then. Chubb disclosed in Q3 2020 that North American commercial P&C pricing increased by more than 15% in aggregate. Some of the price increase will go to cover rising insurance loss rates, but we certainly do anticipate some dropping into underwriting profit too. Admittedly, some of that increased underwriting profit will itself get offset by a decline in investment income owing to lower interest rates, but that is a “feature,” if you will, of P&C insurance companies. Unlike a bank, where the floor on its deposit funding costs practically speaking is zero, there is in theory no reason underwriting profit cannot increase to offset low interest rates, so it is feasible for its earnings to “normalize” far in advance of an eventual rise in long-term rates…” (Click here to see the full text)
8. Cleveland-Cliffs Inc. (NYSE: CLF)
Number of Hedge Fund Holders: 36
PE Ratio: 12.20
Cleveland-Cliffs Inc. (NYSE: CLF) stock has returned 266% to investors over the past year. It is ranked eighth on our list of 15 best value stocks to invest in. The company markets steel products and is based in Ohio. On July 22, the firm posted earnings for the second quarter, reporting earnings per share of $1.46, missing market estimates by $0.05. The revenue over the period was close to $5 billion, up more than 250% compared to the revenue over the same period last year and beating estimates by $50 million.
On July 8, investment advisory Argus initiated coverage of Cleveland-Cliffs Inc. (NYSE: CLF) stock with a Buy rating and a price target of $26, noting that the firm looked set for steep growth on the back of two big purchases and long-term catalysts.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Cleveland-Cliffs Inc. (NYSE: CLF) with 13 million shares worth more than $262 million.
7. Huntington Bancshares Incorporated (NASDAQ: HBAN)
Number of Hedge Fund Holders: 27
PE Ratio: 12.10
Huntington Bancshares Incorporated (NASDAQ: HBAN) is placed seventh on our list of 15 best value stocks to invest in. The company’s shares have offered investors returns exceeding 49% over the course of the past year. The firm operates as a bank holding company. It is based in Ohio. On July 19, the firm announced that it would start offering a new service, named Early Pay, to customers that will be able to access paychecks and other benefits up to two days early at no additional cost.
On June 23, investment advisory Raymond James upgraded Huntington Bancshares Incorporated (NASDAQ: HBAN) stock to Strong Buy from Outperform with a price target of $18, stressing that the recent pullback in the share price was a buying opportunity.
At the end of the first quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $154 million in Huntington Bancshares Incorporated (NASDAQ: HBAN), down from 29 in the preceding quarter worth $886 million.
Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), Berkshire Hathaway Inc. (NYSE: BRK-A), and General Motors Company (NYSE: GM) are some of the best value stocks to invest in, alongside Huntington Bancshares Incorporated (NASDAQ: HBAN).
6. Barclays PLC (NYSE: BCS)
Number of Hedge Fund Holders: 10
PE Ratio: 11.37
Barclays PLC (NYSE: BCS) stock has offered investors returns exceeding 63% over the course of the past twelve months. It is ranked sixth on our list of 15 best value stocks to invest in. The firm is a financial services company based in the United Kingdom. The firm has a market cap of over $39 billion and posted more than $23 billion in revenue last year. It was founded in 1690 and is one of the oldest baking firms in the UK, offering services such as retail banking, credit cards, wholesale banking, investment banking, wealth management, among others.
On July 7, investment advisory UBS raised the price target on Barclays PLC (NYSE: BCS) stock to 210 GBP from 200 GBP, maintaining a Buy rating on the shares. Jason Napier, an analyst at the firm, issued the ratings update.
At the end of the first quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $797 million in Barclays PLC (NYSE: BCS), down from 12 the preceding quarter worth $629 million.
Click to continue reading and see 5 Best Value Stocks to Invest In.
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Disclose. None. 15 Best Value Stocks to Invest In is originally published on Insider Monkey.
