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:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
[text_ad]
STATE STREET CORP....
Insurer Great-West Lifeco and mutual funds provider IGM Financial continue to benefit from their recent moves to focus on their core businesses. We still like both, but prefer IGM for your new buying.
GREAT-WEST LIFECO INC. $48 is a hold. The insurer (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; shares outstanding: 931.2 million; Market cap: $44.7 billion; Price-to-sales ratio: 1.4; Dividend yield: 4.6%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest life insurer, after Manulife Financial....
That’s good news for these leading retailers. They should also benefit as supply chains normalize after the COVID-19 disruptions. Moreover, all three continue to trade at attractive multiples to their projected earnings and are increasing their dividends.
LOBLAW COMPANIES LTD....
EBAY INC. $64 is a buy. The company (Nasdaq symbol EBAY; Finance sector; Shares outstanding: 489.0 million; Market cap: $31.3 billion; Price-to-sales ratio: 3.2; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.ebay.com) operates e-commerce websites in over 190 countries, where sellers pay fees to auction items or offer them at fixed prices....
GENUINE PARTS CO. $116 is still a buy for long-term gains. The company (New York symbol GPC; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 139.1 million; Market cap: $16.1 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.4%; TSINetwork Rating: Average; www.genpt.com) has over 10,800 company-owned and independent auto parts stores in North America, Europe, Australia and New Zealand....
While lower rates will hurt the interest income these two banks receive, the cuts will also make it easier for borrowers to renew mortgages and other loans....