Examples of Value Stocks: Best Value Stocks for 2022
Buy low, sell high. That’s the basic formula for stock market success. In the simplest terms, it’s also the definition of value stocks. Learn more with these examples of value stocks, the diamonds in the rough of the stock market.
What are Value Stocks?
A value stock is one in which its price doesn’t necessarily reflect its fundamental worth. Basically, value stock investors seek bargains.
By investing in a value stock, you are assuming an eventual rise in its stock price. Sooner or later, the market figures out its actual value and the share price goes up. When the market corrects the price, value stocks have the potential to generate revenues.
Value Stock vs. Growth Stocks
Value stocks differ from growth stocks in that the latter are companies with a significantly higher growth rate. While value stocks are in fact undervalued, growth stocks grow faster than the average stock, generating earnings more quickly.
Overall, value stocks are safer than growth stocks. There is more inherent risk in growth stock investing. Growth stocks are usually less established companies considered up-and-coming due to their innovative products or services. Value stocks are generally large, well-established companies. The stock price may have taken a hit because of a down earnings season, negative publicity, or some other factor, but should bounce back in time. Value stocks are more suited to long-term as opposed to short-term investors.
Value Stock Characteristics
Patience is a virtue. That’s something value stock investors must possess because value investing is designed for the long-term. Here’s what to look for when it comes to value stocks. Examples of value stocks characteristics include:
- Low stock prices relative to sales or profits
- Low price-to-earnings ratio
- A low price-to-book ratio
- Long, consistent history
Value stocks usually pay dividends. That is not the case with growth stocks.
Examples of Value Stocks
You undoubtedly recognize the names of these companies behind examples of value stocks. They are some of the top names in their industries, but they may be undervalued.
No. 4 Meta Platforms (NYSE:FB), Formerly Known as Facebook
Meta Platforms, Inc, the company formerly known as Facebook, is the parent company of Facebook, WhatsApp, Instagram and other subsidiaries. These days, it’s also a value stock, as it trades for less than 15 times estimated earnings. That makes it less expensive than about 2/3 of the stocks in the S&P 500 Index.
On April 27, 2022, Meta reported its first quarter results. Total revenue rose 7% from the previous year, but total costs and expenses rose 31%. Income from operations dropped 25%. Year over year, Facebook daily active users were up 4% and monthly active users rose 3%. Revenue growth in the first quarter was impacted by the war in Ukraine.
Meta does not pay a dividend. The stock closed at $212.03 on May 3, 2022. Its 52-week high was $384.33 and the low was $169.
No. 3 Pfizer (NYSE: PFE)
Pfizer was a surprising loser back in 2020. The pharmaceutical giant is now a great example of value stocks. It’s currently supplying the world with Comirnaty, the most utilized mRNA vaccine to prevent severe illness, hospitalization and death from COVID-19. As of May 1, 2022, Pfizer’s cumulative share of doses administered globally increased to 62%. Paxlovid, its antiviral medication used to treat COVID-19, has received regulatory approval or temporary authorization in more than 60 countries.
Pfizer’s first-quarter 2022 results show revenues of $2.7 billion. That reflects 82% operational growth compared to the first quarter of 2021. Revenues increased 2% operationally, excluding contributions from Comirnaty and Paxlovid. The report reaffirmed 2022 revenue guidance for both drugs. Comirnaty revenue guidance is expected to be approximately $32 Billion. That’s despite a 1 billion unfavorable impact from foreign exchange. Paxlovid’s revenue guidance is approximately $22 Billion, with a $0.5 billion foreign exchange unfavorable impact.
However, Pfizer did lower expected earnings per share from its prior estimate of $6.35 to $6.55. It is now estimating EPS of $6.25 to $6.45. Overall, the company projects sales of $98 to $102 billion for the year.
Pfizer’s closing price as of May 3 was $49.29. The 52-week range is $37.96 to $61.71. The annual dividend is $1.60 with a yield of 3.31%.
Keep reading for more on examples of value stocks.
No. 2 Procter & Gamble (NYSE: PG)
When it comes to consumer staples, Procter & Gamble is a behemoth. P&G products run the gamut from Bounty, Charmin, Crest, Dawn, Pampers, Pepto-Bismol, Tampax and dozens of other brands most people have in their households. However, inflation and supply chain issues have affected the multinational corporation and its recent performance was less than stellar.
On April 20, 2022, Procter & Gamble reported its third-quarter fiscal year 2022 with a 7% increase in net sales of $19.4 billion versus the previous year. Diluted net earnings per share were $1.33. That’s an increase of 6% compared to the prior year. The greatest sales drivers are its health care and home care divisions, with beauty and grooming falling short. The company raised its fiscal 2022 outlook in sales growth from a range of 3-4% to a 4- 5% range over the previous fiscal year, making it a great addition to this list of best examples of value stocks.
Procter & Gamble’s current dividend yield is 2.31%. Its 52-week range was $165.35 to $131.94. Its stock price as of May 3, 2022 was $156.21.
No. 1 U.S. Steel (NYSE: X)
U.S. Steel literally built this country’s infrastructure. From buildings to bridges to motor vehicles, U.S. Steel provided the products promoting the growth of the U.S. throughout the 20th century. By the end of the century, however, the rise of lower-cost imported steel proved the death knell of many American steel producers. U.S. Steel was able to buy the assets of National Steel after that company entered bankruptcy in 2002. Overall, it was a challenging time for the industry. Another challenging time occurred more recently, as COVID-19 lockdowns halted construction projects, causing steel prices to drop. The end of the pandemic is having the opposite effect.
U.S. Steel announced it is “transforming” its business model into “a customer-centric, sustainable steel producer with an unmatched value proposition.” Steel prices were high in 2021 and that’s expected to continue in 2022. The war in Ukraine is causing disruptions while the reopening of the economy means heavy demand. Keep in mind that steel prices are always cyclical. They rise and fall in conjunction with the overall economy.
The 52-week range for U.S. Steel is $39.25 to $17.98. As of May 3, 2022, the stock closed at $29.47. U.S. Steel is currently paying a dividend of $0.05 per share.
Value Stock Considerations
These examples of value stocks show that even the best-known companies trade at less than their intrinsic value, making them bargains. While volatility is always a possibility in the stock market, value stocks pose less risk. Think of value investing as an opportunity to buy good stocks at lower prices.
About Jane Meggitt
Jane Meggitt specializes in writing about personal finance. Besides investing and planning for retirement, she writes about insurance, real estate, credit cards, estate planning and more. Her work has appeared in dozens of publications, including Financial Advisor, Zack’s, SF Gate and Investor Junkie. A graduate of New York University, Jane lives on a small farm in New Jersey horse country.