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:
 How Successful Investors Get RICHLearn everything you need to know in ‘The Canadian Guide on How to Invest in Stocks Successfully’ for FREE from The Successful Investor. How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger. |
Loblaw and Canada’s other big supermarket operators have come under pressure for generating strong profits in the wake of the pandemic. The earnings growth in part reflects higher food prices at its stores as the company passes along its own higher costs.
Still, Loblaw’s success at… Read More
These two foodmakers continue to raise their selling prices to offset rising costs for ingredients, fuel, labour and other inputs. Even so, consumers seem willing to stick with their strong brands, which they see as affordable luxuries, instead of switching to cheaper products. Both firms… Read More
LEON’S FURNITURE LTD. $21 is a buy for aggressive investors. The retailer (Toronto symbol LNF; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 67.9 million; Market cap: $1.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 3.0%; TSINetwork Rating: Average; www.leons.ca) sells furniture and appliances through 303 stores, mainly under the… Read More
In 2018, Campbell Soup shifted its focus to its most-profitable products. A key acquisition also gave it a big presence in the fast-growing snack food market. These moves paid off as the COVID-19 lockdowns forced people to eat more of their meals at home. Even… Read More
STATE STREET CORP. $72 is a buy. The company (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 344.5 million; Market cap: $24.8 billion; Price-to-sales ratio: 2.1; Dividend yield: 3.5%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to operators of mutual funds and pension… Read More
HONDA MOTOR CO. LTD. ADRs $31 is a buy. The Japanese automaker (New York symbol HMC; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.7 billion; Market cap: $52.7 billion; Price-to-sales ratio: 0.4; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.honda.com) sold 947,000 cars in its fiscal… Read More
A good way for investors to tap into the fast-growing field of artificial intelligence (AI) is with these three well-established technology firms.
IBM and Cisco are using AI to improve the quality of their software, while Texas Instruments’ chips help run AI applications such as facial… Read More
CAE INC. $29 (www.cae.com) remains a buy. The company continues to benefit as air travel volumes return to pre-pandemic levels. That is spurring airlines to order more of its flight simulators and training services. The company also continues to win new orders from military clients. As a result,… Read More
These two food sellers continue to benefit from higher selling prices, which helps them offset rising costs for food, fuel and other inputs. Even though inflation is starting to ease, it’s unlikely they will significantly lower prices in response. That should continue to push their… Read More
DUN & BRADSTREET HOLDINGS INC. $9.81 remains a buy. The company (New York symbol DNB; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 439.3 million; Market cap: $4.3 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; TSINetwork Rating: Extra Risk; www.dnb.com) continues to benefit from its January 2021 acquisition of… Read More
Now that most countries have lifted their COVID-19 travel restrictions, consumers are shifting their spending away from goods to experiences. That jump in travel volumes has spurred the earnings—and share prices—of these two payment card issuers.
VISA INC. $222 is a buy. The company (New York symbol V;… Read More
Shares of Bank of Nova Scotia are down 19% in the past year, as rising interest rates have increased its loan-loss provisions. In response, new CEO Scott Thomson recently announced several new initiatives to spur growth. Those include increasing its deposit base (which will help… Read More
FINNING INTERNATIONAL INC. $36 is a buy. The company (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 149.3 million; Market cap: $5.4 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.finning.com) sells and services Caterpillar-brand heavy equipment in Western Canada, South… Read More
LEON’S FURNITURE LTD. $23 is a buy for aggressive investors. The retailer (Toronto symbol LNF; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 67.9 million; Market cap: $1.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.8%; TSINetwork Rating: Average; www.leons.ca) began operating in 1909. It now controls nationwide chains (a… Read More
Auto parts maker Linamar is now positioned to take advantage of the shift to electric vehicles (EVs). Given it remains a trusted supplier to the world’s largest carmakers, we’re confident this shift will be as successful as Linamar’s past move into construction and agriculture equipment.
LINAMAR… Read More
Great-West Lifeco has completed several acquisitions in the past two years as part of a plan to diversify beyond insurance. The plan should spur its long-term growth, but constantly integrating new businesses adds risk.
GREAT-WEST LIFECO INC. $37 is a hold. The company (Toronto symbol GWO; Conservative Growth… Read More
The COVID-19-induced surge in online shopping volumes has slowed with the re-opening of physical stores. That has helped lift the shares of these three retailers.
Even so, each of them continues to trade at an attractive multiple to its earnings, and will probably keep raising its… Read More
SNAP-ON INC. $239 is a hold. The company (New York symbol SNA; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 53.1 million; Market cap: $10.5 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.9%; TSINetwork Rating: Average; www.snapon.com) continues to see strong demand from independent garage operators for its tools… Read More
The number of cyberattacks on businesses and individuals continue to increase as more functions move to cloud-computing (Internet based) platforms. That trend is good news for these two firms that help prevent data breaches. However, we feel Gen Digital is the better pick for your… Read More
CANADIAN IMPERIAL BANK OF COMMERCE $61 (www.cibc.com) is a buy. The bank has agreed to settle a lawsuit launched by hedge fund Cerberus Capital Management, which accused CIBC of defaulting on payments related to a limited-recourse note that the bank issued in 2008. CIBC will pay $770 million… Read More
