Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Value stocks are stocks trading lower than their financial fundamentals suggest. They are perceived as undervalued, and have the potential to rise. Many new tech stocks, for instance, start out as growth stocks and transition into value stocks.

They have a low price-to-earnings and price-to-book ratios—which is why they’re less expensive than growth stocks. Due to this fundamental distinction, a value stock is often traded at a more affordable rate than a growth stock.

To investors, they see companies that fall into this category as undervalued. These investors are less likely to invest in a growth stock because they feel that value company’s stock will eventually reach their full potential once they are recognized by the market.

Generally speaking, the climb is steady for value stocks. The only other way for it to emerge into the market like a growth stock is for it to be a bit more innovative with its products or services.

Pat McKeough is an expert at delving into a company’s financial statements and identifying undervalued securities and value stocks. That’s because value stocks are the foundation of any long term investment strategy, at TSI Network we also recommend our three-part Successful Investor strategy:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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Value Stocks Library Archives

Buy CU for income, ATCO for value

Canadian Utilities’ high-quality assets provide it with plenty of cash flow for shareholder dividends. That cash flow also helps explain why we have recommended the stock as a top pick for income seekers since 1995.
We also like its parent company, ATCO. Investing in that firm… Read More

Cannabis spurs Molson dividend hike

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $71 and TPX.B $71; Conservative Growth Payer Portfolio, Consumer sector; Shares outstanding: 216.5 million; Market cap: $15.4 billion; Dividend yield: 4.2%; Dividend Sustainability Rating: Above Average; www.molsoncoors.com) recently formed an alliance with Canadian cannabis producer HEXO Corp. (Toronto… Read More

Tegna expands its TV audiences

TEGNA INC. $15 (New York symbol TGNA, Conservative Growth Portfolio, Consumer sector: Shares o/s: 216.4 million; Market cap: $3.2 billion; Price-to-sales ratio: 1.5; Divd. yield: 1.9%; TSINetwork Rating: Average; www.tegna.com) owns 49 TV stations and two radio stations in 41 markets. It also offers online advertising and… Read More

Updating Pengrowth Energy Corp., Home Capital Group Inc. and SNC-Lavalin Group Inc.

PENGROWTH ENERGY CORP. $0.51 (Toronto symbol PGF; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 560.0 million; Market cap: $285.6 million; Price-to-sales ratio: 0.6; Dividend suspended in January 2016; TSINetwork Rating: Speculative; www.pengrowth.com) has two main properties: its Lindbergh oil sands project in Alberta and its Groundbirch natural… Read More

Tariff fears ease for Linamar

LINAMAR CORP. $45 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.4 million; Market cap: $2.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 1.1%; TSINetwork Rating: Average; www.linamar.com) makes a variety of automotive parts, including cylinder heads, cylinder blocks, camshafts, crankshafts and rods. It… Read More

Robotics, acquisitions set to spur Stanley

STANLEY BLACK & DECKER INC. $130 (New York symbol SWK; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.5 million; Market cap: $19.7 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.0%; TSINetwork Rating: Average; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools for… Read More

Cost cuts set to free up cash flow

GENERAL ELECTRIC CO. $9.37 (New York symbol GE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.7 billion; Market cap: $81.5 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.ge.com) now plans to focus on three main businesses: aviation products, electrical power equipment, and renewable… Read More

Restructuring sets them up for a rebound

NEWELL BRANDS INC. $14 (Nasdaq symbol NWL; Income Portfolio, Consumer sector; Shares outstanding: 423.1 million; Market cap: $5.9 billion; Price-to-sales ratio: 0.7; Dividend yield: 6.6%; TSINetwork Rating: Average; www.newellbrands.com) plans to focus on nine key product lines: writing; baby; home fragrance; food; fishing; Jostens (jewellery); appliances and… Read More

Genuine Parts buys rest of Inenco

GENUINE PARTS CO. $98 (New York symbol GPC; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 146.8 million; Market cap: $14.4 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.1%; TSINetwork Rating: Average; www.genpt.com) has agreed to buy the remaining 65% of Inenco Group that it does not already… Read More

The cloud will spur IBM

IBM $140.56 (New York symbol IBM; Shares o/s: 889.9 million; Market cap: $124.6 billion; TSINetwork Rating: Above Average; Divd. yield: 4.6%; www.ibm.com) reported lower-than-expected sales for the first quarter of 2019. That’s mainly because some customers in Asia delayed investments in new systems. As well, sales… Read More

UTX lifts its 2019 outlook

UNITED TECHNOLOGIES CORP. $140 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 862.3 million; Market cap: $120.7 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.utc.com) completed its acquisition of Rockwell Collins on November 26, 2018, for $30.6 billion… Read More

Gannett attracts takeover interest

GANNETT CO. INC. $9.38 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 114.5 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.4; Dividend yield: 6.8%; TSINetwork Rating: Average; www.gannett.com) publishes its flagship newspaper, USAToday, along with more than 100 others throughout the U.S. It also has… Read More

IBM bets big on cloud computing

IBM has a long history of responding to rapid changes in computer technology. As demand for its consulting services and mainframe computers slows, it’s now investing heavily in cloud computing (where customers access software on the web), analytics and artificial intelligence.
We feel the company’s upcoming… Read More

Leon’s has the more-promising outlook

LEON’S FURNITURE LTD. $14.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 77.5 million; Market cap: $1.1 billion; Dividend yield: 3.9%) has steadily increased the number of stores under its Leon’s banner from 27 in 2003 to today’s 86.
In 2013, the company nearly quadrupled in size with… Read More

Loblaw sharpens a key tool

LOBLAW COMPANIES LTD. $67 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 369.3 million; Market cap: $24.7 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.loblaw.ca) operates 1,085 supermarkets under several banners, including Loblaws, Zehrs, Provigo, Real Canadian Superstore and No Frills.
In… Read More