10 Value Stocks To Invest In Now
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. This definition of course begs the question, “why wouldn’t investors only buy value stocks?”
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The reason is that so-called “value stocks” aren’t generally 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. Of course, that doesn’t mean these names can’t generate big profits, and many of the names on this list have already begun moving in 2020 and 2021. Here’s a look at 10 stocks that can still be considered values in today’s market.
Last updated: May 17, 2021
Lincoln National Corp. (LNC)
Stock price as of May 11: $68.11
Lincoln National fits the mold of a traditional value stock, as its main business line of insurance isn’t particularly exciting and its stock pays a sizable 2.42% dividend yield. Add in a forward P/E ratio of below 20 and LNC has all the characteristics that entice value investors to a stock. Although predicting insurer losses is a futile game, the macroeconomic backdrop could help out Lincoln Financial over the coming years, as both inflation and interest rates are expected to rise. This can help out insurance companies, as they’re forced to invest in conservative investments like bonds to back their insurance policies. If rates on these investments rise, insurers stand to garner some of that additional income.
Read: Top High Dividend Stocks You Should Consider for Your Portfolio
Gilead Sciences (GILD)
Stock price as of May 11: $67.22
Gilead Sciences is the epitome of why some investors shy away from value stocks, as it has perennially been a value stock. Year after year, analysts list Gilead Sciences as being “undervalued,” yet the stock hasn’t gained traction in years. Undoubtedly, Gilead checks all the boxes for being a value stock: It trades at a P/E of less than 10, it pays a dividend north of 4% and its share price is below where it was seven years ago. Still, analysts have a strong buy on the stock, with an average 12-month price target of $78.58.
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Lockheed Martin Corp. (LMT)
Stock price as of May 11: $387.82
Lockheed Martin Corp. is a value-lover’s dream, with recurring government contracts, a P/E ratio of 15 and a dividend yield of 2.65%. The aerospace and defense contractor can trade up and down as the political winds shift, but the bottom line is that the U.S. government will always be a buyer of defense products. Analysts see the stock hitting $417.78 within 12 months, amounting to about an 8% pop. Add in the sizable dividend and investors could be looking at double-digit gains over the next year.
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AT&T Corp. (T)
Stock price as of May 11: $32.26
If you love fat dividends, AT&T is certainly worth a look. The stock currently pays nearly 6.5% annually, a good-enough return for many investors even without stock appreciation. But appreciation may be on the horizon. The longtime conservative company is starting to make moves to amp up its growth, including spinning off its DirectTV division and focusing on subscriber growth for streaming channel HBO Max. Postpaid subscriber additions have also increased two quarters in a row, showing the best growth in a decade.
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CVS Health (CVS)
Stock price as of May 11: $84.37
CVS Health is a “boring” retailer/pharmaceutical stock with a pedestrian 15x P/E ratio and an attractive 2.33% dividend yield. Analysts have a buy rating on the stock with an average price target of $92.93, about 10% above current levels. In one sense, investors can rely on CVS being a defensive stock, as consumers will always need drugs and healthcare products in any type of economy. However, CVS is also trying to position itself as a pharmaceutical leader in a changing landscape, and that will require deft management.
Read: The Top 10 Stocks for 2021
NRG Energy (NRG)
Stock price as of May 11: $34.69
As a utility with a forward P/E of about 13x and a 3.67% dividend yield, NRG Energy is clearly categorized as a value stock. After trading down a few percentage points in 2019 and in 2020, the stock has continued sliding a bit, down about 7.5% year-to-date. However, the company is turning its focus toward more futuristic power technologies, and it has room to grow. For example, right now NRG’s portfolio consists of just 1% renewable energy. As the Biden administration pushes forward on its green energy and infrastructure priorities, companies like NRG may be able to expand their reach into new technologies.
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American Tower Corp. (AMT)
Stock price as of May 11: $247.32
American Tower Corp. is a name that may not be familiar to a ton of investors, but it’s been printing money as 5G technology is just beginning to take root across the globe. American Tower has the largest portfolio of broadcast towers in the U.S. and continues to expand its wireless infrastructure as demand continues to soar. American Tower stock is up about 10% year-to-date, but analysts see it continuing to rise. The average analyst price target over the next 12 months is $281.33, representing about a 14% rise from current levels. The stock also pays a hefty 2% dividend yield, helping keep it in the “value” camp.
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American Water Works Company (AWK)
Stock price as of May 11: $153.70
American Water Works fits the profile of an old-fashioned, stodgy utility, which lands it squarely in the value-stock camp. But exciting things are going on at American Water Works, which is the largest publicly traded water and wastewater utility in America. As droughts are becoming more frequent and more severe, thanks in part to climate change, demand for water is growing and will likely continue to do so for the foreseeable future. American Water Works continues to boost earnings through both acquisitions and organic means, and analysts have a consensus “buy” rating on the stock, with an average price target of $162.38.
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ExxonMobil Corp. (XOM)
Stock price as of May 11: $60.59
Big oil companies are prototypical value stocks, as they generally trade at low multiples and pay high dividends. But ExxonMobil is on the move, as hopes for a recovering economy freed from COVID-19 restrictions would significantly boost demand for oil and gas products from both businesses and consumers alike. The lumbering oil giant has actually put on its track shoes thus far in 2021, jumping 47% year-to-date. However, there is still a ton of value at XOM, as it actually remains down 31% over the past five years and pays a hefty 5.5% dividend.
Read: What $1,000 Invested in Stocks 10 Years Ago Would Be Worth Today
Crown Holdings (CCK)
Stock price as of May 11: $112.39
Analysts are bullish on Crown Holdings, with a consensus “strong buy” rating and an average price target of $126.20, about 14% above its May 11 close. Even after a five-year gain of 105%, the company’s P/E sits at a reasonable 21.5x. The company is a leader in packaging for consumer goods, particularly metal packaging, with operations in 47 countries and net sales of $11.6 billion. With the global economy reopening as the coronavirus recedes, demand for Crown Holdings’ products should similarly rise.
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This article originally appeared on GOBankingRates.com: 10 Value Stocks To Invest In Now
