A value stock is one that seems to be undervalued based on a combination of factors, such as its valuation history, current stock price, dividend yield, dominant market share and others. Of course, this definition begs the question: Why wouldn’t investors only buy value stocks?
The reason is that so-called “value stocks” generally aren’t newsmakers — some would even classify them as “boring.” Think about the stocks you hear on the financial news all day; typically, they are the exciting, high-flying stocks like Tesla and GameStop that make huge moves. Tesla, for example, gained over 700% in 2020, while GameStop popped over 400% in a single week in early 2021.
Meanwhile, oil and gas companies, utilities and other more traditional companies tend to lumber along under the radar. But that doesn’t mean these names can’t generate big profits. Here’s a look at 10 stocks that can be considered values in today’s market.
1. Rent-A-Center Inc. (RCII)
- Stock price as of Nov. 21: $21.38
Rent-A-Center leases furniture, appliances and electronics to consumers across a network of over 2,000 stores and offers pay later and rent-to-own options. The retailer’s recent acquisition of Acima Holdings, which provides rent-to-own financing at over 15,000 retail stores, should enable Rent-A-Center to expand its partner base. In its third-quarter 2022 earnings report, Rent-A-Center acknowledged the challenges posed by inflation and other conditions beyond its control but said it is “taking action to support the company’s near-term performance” and expects to be ready to move forward with its strategic agenda when the economic environment normalizes.
Analysts reported by Yahoo Finance rate the stock a 1.9 on a scale of 1 being a strong buy to 5 which is a sell. The average price target is $34.75 in a range of $22 to $72, which is upgraded since last month and suggests the $21.38 price as of Nov. 21 still represents an opportunity to buy a dip.
2. M&T Bank Corp. (MTB)
- Stock price as of Nov. 21: $169.52
M&T Bank Corp. is a holding company for M&T Bank, which ranks in the top 20 among U.S. full-service commercial banks. Its operating segments include business banking, commercial banking and real estate, residential mortgage and retail banking. M&T also provides trust and wealth management, institutional brokerage and securities and investment management services. The financial institution’s stock suffered last year, as did many other bank stocks. However, interest rates are rising, and bank profits are likely to follow.
MTB is up 10.38% so far this year and 7.72% over the past year — a performance that compares favorably to the Dow Jones U.S. Banks Index, which is down 21% for the past year. M&T’s price-earnings ratio is 16.29, and the stock pays a 2.81% dividend yield.
3. Qualcomm Inc. (QCOM)
- Stock price as of Nov. 21: $120.20
Qualcomm is a major player in the wireless and patent management industries, with interests in 5G and chipsets, among other technologies. Despite supply chain bottlenecks and shortages, Qualcomm stock held its own until prices dipped at the beginning of the year. Looking forward, Qualcomm CEO Cristiano Amon, told Fox Business he expects more balance between demand and supply in the second half of the year, and a gradual easing of the crisis after that, allowing Qualcomm to ramp up production.
With a P/E ratio sitting at 11.01, Qualcomm stock is a solid value. Analyst price targets range from $105 to $238, with predictions averaging $149.84, which is slightly lower than last month’s average target. KeyBanc is bullish on the stock following a conversation with Qualcomm management, citing the likely success of the company’s expansion into non-phone markets, Barron’s reported.
4. Meta Platforms Inc. (META)
- Stock price as of Nov. 21: $110.88
Meta, formerly known as Facebook, has taken a beating this year, and shares are trading near record lows. However, despite vulnerabilities such as privacy issues, some believe the recent sell-off is unwarranted because of Meta’s unrivaled dominance as a market leader, Seeking Alpha reported.
Over 3.5 billion people, representing 47% of the world’s population, use a Meta social media platform at least once a month, according to Statista. Analysts rate META a “buy” and predict an average price target of $154.93, which is a downgrade compared to last month but still well above the stock’s price of $110.88 when the markets closed on Nov. 21.
5. Global Ship Lease Inc. (GSL)
- Stock price as of Nov. 21: $17.33
Global Ship Lease owns container ships and leases them to shipping companies. The London-based company provides maintenance, crews, lubricants, insurance and technical operations for its charters but does not share fuel costs, and it has no direct exposure to the freight market.
In its third-quarter earnings release, Global Shipping Lease announced earnings and revenue that beat analysts’ estimates. During that quarter, the company established five-year charters for 10 ships, adding over $770 million in contracted revenues.
Analysts give GSL a “strong buy” rating. The average price target is $31. Analysts say the stock is seriously undervalued and could see 98% annualized returns over the next five years based on projected earnings growth.
6. Insteel Industries Inc. (IIIN)
- Stock price as of Nov. 21: $28.01
Insteel Industries manufactures steel wire reinforcement products for concrete construction. As the largest company of its kind in the U.S., Insteel focuses on nonresidential construction, with residential construction making up 15% of its sales.
Despite raw material shortages, labor shortages and a weak residential construction market, Insteel finished its fiscal year with its highest-ever annual revenue and net earnings. Analysts rate the stock a “strong buy.” With a price target of $42 and a P/E ratio of 4.44, Insteel is an undervalued stock that could produce 133% annualized returns over the next five years, according to Yahoo Finance.
7. American Tower Corp. (AMT)
- Stock price as of Nov. 21: $219.91
American Tower Corp. is a real estate investment trust that may not be familiar to casual investors, but it is just beginning to take root across the globe. American Tower has the largest portfolio of broadcast towers in the U.S. and is expanding its wireless infrastructure as demand soars.
American Tower stock, like the market overall, has been volatile this year, but analysts see it making solid gains. In its third-quarter earnings statement, the company reported revenue growth that beat analysts’ estimates. The average price target among analysts polled by Yahoo Finance is $246.94, about 12% above the current price.
8. T-Mobile US Inc. (TMUS)
- Stock price as of Nov. 21: $149.88
T-Mobile is America’s third-largest wireless carrier following its 2020 merger with Sprint. Over the next several years, T-Mobile expects to expand its network capacity and speed by 14 and 15 times, respectively, and provide 5G service to 99% of Americans.
These are lofty goals, to be sure, but the company had its strongest year ever in 2021 and achieved industry-leading momentum in wireless, according to a statement accompanying its earnings release for the fourth quarter.
On June 21, the company announced it had reached an agreement with Dish to give its customers access to T-Mobile’s 5G network, resulting in what T-Mobile Chief Marketing Officer Mike Katz said is a “multibillion-dollar revenue commitment for our business.” It’s also partnering with SpaceX to provide cell coverage across the U.S., including to remote locations where signals tend to fail, according to Zacks.
An average price target of $176.43 supports analysts’ “strong buy” consensus.
9. Exxon Mobil Corp. (XOM)
- Stock price as of Nov. 21: $110.97
Big oil companies are prototypical value stocks, as they generally trade at low multiples and pay high dividends. But ExxonMobil was already on the move when winter set in last year, and the momentum has continued amid the ban on Russian oil due to that country’s invasion of Ukraine, albeit with a few hiccups.
Oil and gas prices hit multiyear highs in March, and gas prices hit an all-time high in June, boosting earnings across the energy industry. Although prices have dropped since then, ExxonMobil’s stock is up 81.35% since the beginning of the year and is paying a 3.25% dividend.
10. Camping World Holdings Inc. (CWH)
- Stock price as of Nov. 21: $27.29
Investors with an appetite for risk might consider Camping World as a long-term investment. While much of the COVID-19 fear that drove travelers to RVs has faded, high airfares and rampant flight cancellations could keep demand high for the foreseeable future.
Analysts are bullish on the oft-maligned stock, giving it a “buy” rating and predicting an average price target of $31.33.
What Is a Value Stock?
A value stock is one that is trading for less its worth. These stocks typically represent companies that haven’t yet caught the attention of investors or, as Merill Edge phrased it, have fallen out of favor with investors despite having solid fundamentals. As a result, they’re priced low compared to the overall market and comparable stocks.
Value Stocks FAQStill have questions? You're not alone. Here's what people are asking about value stocks.
- Why would you buy a value stock?
- Value stocks appeal to investors who want to get in early, before a stock has been "discovered," and hold for the long term as the stock grows. Investors looking for deals also like value stocks.
- Are value stocks a good investment?
- Value stocks can be a good investment, especially when the economy is early in a recovery phase. However, there's never a guarantee. Holding stock for a long time can earn you significant gains -- as Warren Buffett would attest -- but it also means you're exposed to price fluctuations. In addition, value stocks often represent newer companies with limited track records. Research value stocks before you buy, and never invest more than you can afford to lose.
- Should I buy growth or value stocks?
- Which type of stock is better, growth or value, depends on your investment style, your goals and your tolerance for risk.
- Growth stocks might be the better choice if you take a hands-on approach to managing your portfolio. They're priced relatively high, so you're buying high with the intention of selling even higher. It's a riskier way to invest but can pay off with faster and higher growth.
- More conservative investors and those who like to "set and forget" their holdings are better off with value stocks. Value investors buy low and wait for the stock to grow over the long term.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of Nov. 21, 2022, and is subject to change.