5 Value Stocks to Buy and Get More for Your Money
These value stocks to buy can give anyone’s portfolio a significant boost. This is because they can experience outsized growth. So it’s no surprise that value investing is the strategy employed by famous investors such as Warren Buffett and Benjamin Graham. This involves finding stocks that are undervalued. In other words, they are trading at a price that is lower than the company’s intrinsic worth. Stocks can be undervalued for many reasons, such as recent negative press.
Oftentimes, negative press creates a negative emotional response from investors. And yet, negative press coverage doesn’t change a company’s fundamentals. If factors such as earnings and cash flow are still strong, you may have a value stock on your hands.
Five Value Stocks to Buy Today
- Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B)
- Wells Fargo & Company (NYSE: WFC)
- General Motors Company (NYSE: GM)
- Bank of America Corporation (NYSE: BAC)
- DaVita Inc. (NYSE: DVA)
Now, let’s take a closer look at each of these stocks…
Berkshire Hathaway Inc.
Yes, Warren Buffet’s Berkshire Hathaway happens to make the list of value stocks to buy. Buffet’s investments have consistently paid off for investors. Plus, Berkshire Hathaway wholly owns a number of big-name brands and businesses such as Duracell, GEICO, Dairy Queen, Fruit of the Loom, and more. It also has a significant stakes in Kraft Heinz, American Express, and Coca-Cola.
Berkshire’s stocks are considered undervalued. But unless you are buying fractional shares, you will likely have to buy BRK-B. That’s because the share price for BRK-A is over $400,000! It also has a P/E ratio of 6.27, though. This indicates the high degree of value you get from this stock. Its estimated return is 26%.
Wells Fargo & Company
Wells Fargo is one of the biggest banks in the U.S. Despite this, it’s also one of the best value stock to buy. It is a multinational financial corporation with several HQs around the United States. The company says it has an ATM within two miles of over half of U.S. households.
Despite its large footprint, Wells Fargo stock is undervalued right now according, to Yahoo! Finance. Its P/E ratio is a favorable 11.93 with an estimated return of 88%. Right now, CNN Business analysts are giving a consensus “hold” recommendation. But their median price target represents a 7.2% increase.
General Motors Company
General Motors is the quintessential American company. It was founded in 1908 and is behind popular car brands like Chevrolet, Buick, Cadillac, and GMC. While GM is arguably an old-school brand, it plans to go all-electric by 2035. In turn, it will completely phase out gas-powered vehicles. Regardless of anyone’s thoughts on the topic, that is the direction the auto industry is going. So GM is setting itself up for long-term success.
What about GM stock? It, too, looks good at the moment. The stock is undervalued with a P/E ratio of just 6.60. And it has an estimated return of 31%. It is a strong buy according to TipRanks with 14 buy ratings and just one hold rating. Their median price target shows a 28 percent increase. That adds up to a pretty captivating case for one of the more worthwhile value stocks to buy.
Bank of America Corporation
Next on the list is Bank of America. This is the second-largest bank in the U.S. by total assets. BofA is a multinational bank offering both business and consumer banking services. It is also the second-largest holding in Berkshire Hathaway’s hedge fund. It makes up over 14 percent of its total holdings. That accounts for over $40 billion invested in Bank of America alone.
BAC is also a good buy right now. The stock is undervalued according to Yahoo! Finance. It has a P/E ratio of 13.91 and an estimated return of 16%. Over at CNN Business, feelings are a bit more mixed with 14 buy opinions, nine holds, and one sell. Its median price target is a 3.7% increase. Nonetheless, this is still a strong case for it as one of the better value stocks to buy on the market right now.
DaVita Inc.
Last on this list is DaVita Inc. which provides kidney dialysis services. It has a network of 2,816 outpatient centers and serves 204,200 patients. An estimated 37 million adults have chronic kidney disease in the U.S. So, there is much room for DaVita’s services to be more widely used. It was founded in 1979 and is based in Denver, Colorado.
DVA stock is also undervalued and its P/E ratio stands at 15.23. Its estimated return is 21%. At the moment, though, analyst opinions indicate a consensus hold at the moment. For instance, TipRanks has five analysts, four of whom are recommend holding. One recommends it as a buy though. However, its median price target shows an impressive 31% increase. And that alone makes this one of the better value stocks to buy now.
Are These Value Stocks to Buy a Good Investment?
Value stocks are simply stocks that are often overlooked by investors. Thus, you might expect value stocks to be small, relatively obscure companies. But if you live in the U.S., you probably know most, if not all of the names mentioned on this list of value stocks to buy.
There is no rule that says value stocks must be small or unknown companies. Investor confidence can be fragile. And these stocks are simply not being bought at the typical rate at the moment. But that means there is an opportunity to be had.
Consider Berkshire Hathaway which has achieved an annual return of 20% since 1965. Compare that to an average return of 10.9% for the S&P over the past 50 years. It’s easy to see the appeal of value stocks. Additionally, we can consider the iShares MSCI USA Value Factor ETF (CBOE: VLUE). It has a one-year return of 39.60% compared to 28.78% for the S&P 500.
Longer-term returns are less favorable for VLUE. But that points to the volatility of value investing. At times returns can be lower.However, in good years, returns can soar well past the S&P 500. Like most high-return investments, you must be willing to take on additional risk. And with this, a diversified portfolio is key.
If you’d like to learn about additional investment opportunities and strategies, we suggest signing up for the Liberty Through Wealth e-letter. In it, investment expert Alexander Green helps new and experienced investors find the best prospects on the market today. All you have to do is enter your email address in the box below to get started.
About Bob Haegele
Bob Haegele is a personal finance writer who specializes in investing and planning for retirement. His hefty student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing, he enjoys travel and live music.