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

CIBC poised to gain from lower rates

Elevated interest rates and inflation continue to force CIBC to put aside higher amounts to cover potential loan defaults. However, actual loan losses remain small. As well, it looks like interest rates will come down in 2024, which will let it reverse some of those… Read More

Higher shelf prices hurt their volumes

These two foodmakers have had to increase their selling prices in the past two years in response to rising costs for ingredients and other inputs. However, those higher prices are prompting consumers to switch to cheaper generic brands. New weight-loss drugs could also cut demand… Read More

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Buy Amex for its special advantages

Capital One Financial recently agreed to merge with Discover Financial Services. The deal, if approved, would create the largest U.S. credit card company by loan volume.

Despite the emergence of a significant new competitor, the shares of American Express rose on the news. The gain reflects… Read More

A good way to tap into rising resource prices

Finning’s earnings generally depend on cyclical commodities, particularly crude oil and copper. We think their prices will resume their upward direction in the next few years. Moreover, increasing government spending on infrastructure projects helps offset that cyclical risk.
FINNING INTERNATIONAL INC. $36 is a buy. The company (Toronto… Read More

Here are key updates on your holdings

MAPLE LEAF FOODS INC. $26 is a hold. The company (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.5 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.2%; TSINetwork Rating: Average; www.mapleleaffoods.com) opened two new processing facilities in 2022: a poultry plant in London,… Read More

New cost-cutting plan spurs Transcontinental

Thanks to a new cost-cutting plan, Transcontinental’s shares have rebounded nearly 40% since falling to $10 in November 2023. While the company remains vulnerable to an economic slowdown, it stands to gain as inflation eases and interest rates start to decline, possibly later this year… Read More

Going green should cut its costs

LOBLAW COMPANIES LTD. $135 is a buy. Canada’s largest food seller (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 316.4 million; Market cap: $42.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.3%; TSINetwork Rating: Above Average; www.loblaw.ca) recently purchased 10 Freightliner eCascadia electric trucks, which increased… Read More

Aggressive stocks help boost your returns

We continue to believe there’s room for most investors to hold aggressive stocks, which typically are more leveraged (with more debt) and volatile than conservative stocks.
Still, to cut your risk, you should limit aggressive stocks to no more than 20% of your total portfolio. We… Read More

Buffett sells more HP shares

HP INC. $30 is a hold. The company (New York symbol HPQ; Conservative Growth Portfolio; Manufacturing sector; Shares outstanding: 990.9 billion; Market cap: $29.7 billion; Price-to-sales ratio: 0.6; Dividend yield: 3.7%; TSINetwork Rating: Average; www.hp.com) is a leading maker of personal computers and home and office printers.
Billionaire investor… Read More

This new firm still has appeal

EMBECTA CORP. $18 is still a buy. The company (Nasdaq symbol EMBC; Conservative Growth Portfolio, Manufacturing sector; Shares o/s: 57.3 million; Market cap: $1.0 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.3%; TSINetwork Rating: Average; www.embecta.com) took its current form in April 2022 when Becton Dickinson (see left) spun… Read More

Better efficiency lifts earnings

STATE STREET CORP. $76 is a buy. The company (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 308.6 million; Market cap: $23.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.6%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to operators of mutual funds and pension… Read More

Three low-risk ways to profit from AI

The launch of ChatGPT, the online chatbot, which simulates human conversation to answer complex questions, demonstrated the advances in artificial intelligence (AI) software over the past few years.
While AI is driving the shares of chipmakers like Nvidia to new heights, there are other technology stocks,… Read More

Top brands and spinoff should spur Leon’s

Consumers are spending less on furniture in response to higher interest rates and inflation. However, Leon’s strong brands will help its sales rebound with the economy. Its plan to spin off its real estate holdings as a REIT will also unlock hidden value.
LEON’S FURNITURE LTD… Read More

Lower costs will boost earnings

BANK OF NOVA SCOTIA $60 is a buy. The bank (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $72.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 7.1%; TSINetwork Rating: Above Average; www.scotiabank.com) is cutting 3% of its global workforce as it… Read More

Narrower focus will help both of them

Insurer Great-West and mutual fund seller IGM are re-organizing their operations. These moves will let them better focus on their main businesses and spur their long-term profits. However, we prefer IGM for your new buying.
GREAT-WEST LIFECO INC. $44 is a hold. The insurer (Toronto symbol GWO; Conservative… Read More

Linamar’s outlook remains bright

The big three U.S. automakers—General Motors, Ford and Stellantis—recently agreed to new contracts with unionized auto workers. As a group, those customers account for just over half of Linamar’s total revenue, so labour peace cuts its risk. The company is also doing a good job… Read More

CIBC raises your dividend

CANADIAN IMPERIAL BANK OF COMMERCE $58 is a buy. The bank, (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 924.0 million; Market cap: $53.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 6.2%; TSINetwork Rating: Above Average; www.cibc.com) in response to rising interest rates and inflation,… Read More

Earnings should rise in 2024

BANK OF MONTREAL $117 is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 720.9 million; Market cap: $84.3 billion; Price-to-sales ratio: 2.5; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bmo.com) completed its $13.8 billion U.S. acquisition of Bank of the… Read More