Best Value Stocks to Buy in 2024

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Value investing is the art of uncovering hidden gems in the stock market. It involves finding stocks that trade for less than what they are really worth, but with plenty of potential.

Some of the world’s best-known investors, including Warren Buffett, Mohnish Pabrai, and Benjamin Graham, have become successful using a value-investing approach. Value investors apply market metrics to find stocks with a competitive edge that have every chance to outperform the market. It takes a little work, but everyday investors can use those same methods to find the best value stocks.

In this guide, we analyze the best value stocks available now to help you apply the concept. Our picks are varied by industry and geographic location, but they all have a long history of being profitable, and trade at a price-to-earnings (P/E) ratio of 13 or below. Discover the 10 best value stocks below: 

10 Best Value Stocks to Buy in May

Here’s a quick list of our picks of the 10 best value stocks to buy today: 

  1. Toyota Motor Corp.: The Japanese carmaker, the world’s second largest automaker, is in its 90th year. Its also makes revenue from offering leases to dealers and customers. It trades at under 11 times earnings.
  2. Bank of America: The large-cap financial services company has been around more than 100 years, and it trades at an attractive P/E of slightly above 11. Its fourth-quarter profit fell, but beat analyst estimates.
  3. JP Morgan Chase & Co.: The world’s largest bank has a history that dates back to 1799 and it’s the world’s largest bank by market value. The stock trades at slightly more than 11 times earnings.
  4. Toll Brothers: The financials of this mid-cap U.S. home builder already reflect the housing market rebound from the impact of rising interest rates and inflation that have put pressure on housing stocks.
  5. CVS Health: The largest healthcare company in the world, which was founded in 1963, has a P/E of slightly above 11 and is on track for another year of revenue and net income growth despite some headwinds. 
  6. Sekisui House: The Japanese home builder constructs detached homes, rental properties and does remodeling builds in the U.K., Japan, China, Singapore, the U.S. and Australia and has P/E ratio of around 13.
  7. Altria Group: The large-cap U.S. tobacco company, formerly known as Philip Morris, pays an outstanding dividend with a yield of 9.59% and trades only at about 5 times earnings. 
  8. Rolls-Royce: The large-cap British company has roots that date back to the 19th century makes and services engines for aircraft, military vehicles and boats has bounced back from the pandemic’s impact.  
  9. Allianz: The large-cap German company is the world’s largest insurer and has an asset management arm. It’s bouncing back from a year that saw a rash of claims due to natural disasters. Its P/E ratio is under 12. 
  10. Shell: Trading at about 11 times earnings, the U.K.-based oil and gas company, is benefiting from a sustained demand for oil and higher margins, and it has a generous stock buyback program.

In-Depth Analysis of the Top Value Stocks to Buy

Let’s explore the top value stocks that are worth considering May 2024 in more detail.

1. Toyota – Best Value Stock for the Future

The world’s largest carmaker is preparing for the era of electric vehicles (EV), first and foremost it’s focusing on hybrid-electric models (HEVs) instead of pure EVs, with hybrids accounting for more than a third of its total sales. Its Toyota Camry, the top-selling car in the U.S., will only be sold as a hybrid car starting in 2025.

Toyota price chart

The strategy of focusing on hybrids is paying off. In its most recent quarter it saw a nearly 50% increase in hybrid-electric car sales, which helped it beat analysts’ earnings estimates and prompted it to lift its full-year profit forecast. Its total vehicle sales rose by 10%. 

Based on its new guidance, in the full fiscal year ending in March, it expects to sell 9.45 million units and sees revenue of JPY 43.5 trillion ($304.2 billion), compared with JPY31.38 trillion in fiscal 2022. It estimated that full-year net income will be JPY 4.5 trillion  ($31.5 billion) from JPY 2.85 trillion in 2022.

The shares have risen 93% in the past year and they are up 40% this year, and yet, the P/E ratio remains an attractive 11 times. The company delivers a twice-annual dividend and the yield is 1.63%, but with a payout ratio of only 20.81%, there’s a lot of room for more increases.

2. Bank of America – Best Value Stock for a Drop in Interest Rates

Bank stocks have struggled last year because high interest rates softened the demand for mortgages and consumer lending, and made short-term bonds and other yield-bearing investments more attractive than savings accounts. However, if the interest rate hikes have really peaked and there’s an easing cycle on the horizon, this could be an attractive time to get back in on a solid banking stock.

BAC price chartThe second largest bank in the U.S. posted adjusted net income of $5.9 billion, or $0.70 per diluted share, in its fourth quarter of 2023, down 17% from $7.1 billion, or $0.85 per diluted share, in the same three months a year earlier. Adjusted revenue, net of interest expense, fell 4% over the same period last year to $23.5 billion.

The company continues to see new business, with 600,000 new consumer checking accounts, the 20th consecutive quarter that number has grown. 

The lender raised its quarterly dividend by 9.1% this year to $0.24, equaling a yield of around 2.79% and a conservative payout ratio of 29.37%. The company has raised its dividend for 10 consecutive years.

3. JPMorgan Chase – Best Value Stock for a Safe Dividend

JP Morgan Chase is the world’s No. 1 bank by assets, with separate divisions for Consumer and Community Banking, Corporate and Investment Banking, Commercial Banking, Asset and Wealth Management and Corporate. That size and diversity gives the stock stability. 

JPM stock price

The company’s stock did well at a time when investors were concerned about deposit flight following the collapse of several U.S.-based regional banks – Silicon Valley Bank, Signature Bank and First Republic Bank all collapsed.

The U.S. banking giant posted fourth quarter revenue of $38.6 billion, up 12% from a year earlier, while net income totaled as $9.31 billion, down 15% from the year earlier, due to some items related to the acquisition of First Republic Bank. 

A high interest rate environment boosts banks’ earnings from interest as they are able to charge more on the money they lend. Jamie Dimon, the bank’s chief executive said that the results in 2023 reflect “over-earning” on both net interest income and credit, but he remained confident the bank will continue to deliver healthy returns even after they normalize.

The company has increased its dividend for 13 consecutive years, including a 5% boost last year to $1.05 per quarterly share equaling a yield of around 2.27%. The payout ratio of 21.17% leaves room for continued increases.

4. Toll Brothers – Building on a Potential Homebuilding Comeback

Toll Brothers, the fifth largest U.S. homebuilder by revenue, focuses on the luxury housing market. It ended 2023 with 377 selling communities, many of them in the South and in mountain states, compared to 328 in the same quarter a year earlier. The company’s lending arm reported that more than half of Toll Brothers home buyers used the company’s mortgage services.  

Toll Brothers price chartWith demand rising, there is a dearth of home listings, particularly a lack of new homes available on the market, so that plays into the company’s strengths.

In the fiscal first quarter ended in December, Toll posted home sales revenue of $1.93 billion, up 10% year over year, and putting it on track for its fourth consecutive year of revenue growth. It delivered 1,927 homes, 6% more than a year earlier. Toll also reported net income of $239.6 million, up 25% over the prior year period and EPS of $2.25 versus $1.70 a year earlier. 

The company raised its dividend by 5% last year to $0.21 per quarterly share, the third consecutive year of increases. The yield is a below-average 0.72%, but with the payout ratio on the dividend only around 6.5%, a dividend cut would be unlikely.

5. CVS Health – A Healthcare Giant With Steady Revenue Growth 

The large-cap pharmaceutical and primary care company, founded in 1963 has bounced back strong from COVID-19 doldrums, with 11 consecutive quarters of increased revenue.

CVS Health price chartThe healthcare company’s stock recently faltered after the company cut its profit guidance for 2024. It lowered its projected adjusted EPS to at least $8.30 from at least $8.50. In 2023, full-year adjusted EPS was $8.74.

In the fourth quarter, CVS saw revenue growth in all of its sectors as it reported overall revenue of $93.8 billion, up 11.9% year over year. Adjusted EPS was $2.12, compared to an adjusted EPS of $2.04 a year earlier.

CVS increased its quarterly dividend by $0.60 in December to $0.665, raising it for a third consecutive year. Over the past decade, CVS has raised its dividend by more than 120%. The dividend yield is an above-average 3.6% and the payout ratio is about 36%.

6. Sekisui House – International Homebuilder With Consistent Growth

The Japanese homebuilder operates in four different segments, Overseas, Development, Supplied Housing and Built to Order. Sekisui is on track for its eighth consecutive year of increased revenue

Sekisui price chart

In the nine months ended October, the company posted revenue of  JPY 2.19 trillion ($14.6 billion), up 2.8% year over year, but profit fell by 5.9% from the same period a year earlier to JPY 141.9 billion ($945 million). Revenue was driven by 42% increase in the development business segment and a 27.6% increase in the supplied housing business. 

The company has raised its quarterly dividend for three consecutive years, including a 2.5% bump last year to $0.40, giving it a yield of around 3.49%. 

7. Altria Group – Value Stock With an Ultra-High Dividend

Altria, formerly known as Philip Morris, faced with declining cigarette sales, has been branching out into smoke-free products as consumers seek healthier options. The company, hoping to improve its market share of smoke-free products, bought NJOY Holdings last year for $2.8 billion and said it plans to expand the distribution of the NJOY ACE, the only pod-based e-vapor product to get marketing authorization from the Food and Drug Administration.

Altria price chart

The company, known for the Marlboro, Copenhagen, Black & Mild brands, posted fourth-quarter revenue of $5.98 billion, down 2.4% from a year earlier, citing lower domestic cigarette sales due to industry-wide declines and competition from illegal e-vapor products. Adjusted EPS remained level from the same year earlier quarter at $1.18. 

As its latest guidance, Altria expects 2024 full-year adjusted EPS in a range of $5.00 to $5.15, rising between 1% and 4% from $4.95 in 2023. 

Altria continues to have strong cash flow, and in 2023, it repurchased $1 billion of its own shares and plans to spend the same amount on buying back stock this year. It also rewards investors with the highest-yielding dividend in the S&P 500 at around 9.6%. The company has raised its dividend for 14 consecutive years, including a 4% increase last year to $0.98 per quarterly share. The only concern for the dividend, though, is the payout ratio is high at 80%.

8. Rolls-Royce – Engine Maker Benefits From Airlines’ Rebound 

Rolls-Royce, whose engines power more than 35 types of commercial aircraft, made some big changes last year as it emerged from losses suffered during the pandemic. It cut jobs and hired a new CEO in Tufan Erginbilgic, and the moves are beginning to yield results.

Rolls-Royce price chart

Currently priced at 375 British pence ($4.75) the stock trades on the London Stock Exchange, and has gained 153% over the past year driven by Erginbilgic’s earnings forecasts. In December, Rolls-Royce said it expects underlying operating profit increasing to between £2.5 billion and £2.8 billion by 2027 from £0.5 billion in 2022. It also raised its 2023 cash flow estimate to between £0.9 billion and £1 billion. 

In the fourth quarter, revenue rose 13.2% from a year earlier to £4.48 billion and net income was up 315% to £591 million. Full-year underlying operating profit, its preferred profitability  metric, more than doubled to £1.6 billion in 2023, from £652 million in 2022. Profit has been driven by cost cuts and also at play is the increased flying hours by the airline industry that is boosting demand for Rolls Royce engines. 

Rolls Royce was once a dividend darling, but it suspended its dividend in 2020 during the pandemic. This year, the company hinted it was thinking about returning the dividend, possibly as soon as next year, considering how good business is. At its current price, Rolls-Royce appears to be among the best penny stocks to buy now.

9. Allianz – Insurance Giant Expects to Bounce Back From Rough Quarter

The world’s largest insurance company operates across five segments – Property-Casualty, Life/Health, Asset Management, and Corporate and Other. Fourth-quarter operating profit, the company’s preferred profit measure, jumped 17% to 3.8 billion euros ($4.1 billion) driven by the performance of the Life/Health business segment, specifically in the U.S. and Italy.

Allianz share price

In 2023, full-year operating profit rose 6.7% to 14.7 billion euros, within the company’s guidance range. Allianz’s new operating profit estimate for 2024 is 14.8 billion euros, with a 1 billion euro margin of error on either side. Fourth-quarter revenue climbed 7.8% to 39.6 billion euros and net income doubled to 2.2 billion euros.

Allianz has increased its annual dividend by an average of 10% over the past decade, not including a proposed 21% bump this year to €13.80 euros a share ($15), meaning a yield of around 5.5%. The company has recently raised its payout ratio limit to 60% from 50%, giving itself scope for larger dividend increases.

10. Shell – Consistent Earnings Growth Despite Revenue Drop

The Anglo-Dutch company is the world’s third most profitable oil and gas company, with trailing 12-months earnings of $47.43 billion, but its shares haven’t kept up with its success. They are trading down 5% in the past year. The company trimmed its dividend in 2020 during the pandemic, Shell’s first dividend cut since World War II, and many income-oriented investors haven’t returned. 

Shell price chart

However, the oil giant has recommitted to shareholder value, and  in 2023, it returned $23 billion to shareholders in dividends and buybacks. It has recently raised its dividend by 4% to $0.688 and said it will buy back $3.5 billion of its shares in the next three months. Its dividend yield stands at 4.3%.

Fourth-quarter adjusted earnings rose 17% to $7.3 billion, reflecting gains at the operational level and strong liquified natural gas (LNG) trading results. Revenue in the quarter declined 22% to $78.7 billion. Full-year adjusted earnings dropped 29% to $28.25 billion, and revenue was down 17% at $316.62 billion. 

Shell has shown itself to be capable of adapting to changing market conditions. To future-proof itself, it’s in the process of moving beyond being a traditional oil and gas company to a more diversified energy company with a focus on sustainability.

Where to Buy Value Stocks

In order to buy value stocks, you’ll need an online stock broker that offers a wide selection of shares and the data you need to make informed investing decisions.

One of the best brokers for value investors is eToro. eToro offers thousands of stocks from exchanges around the world, all with 0% commission. That means you’ll pay no broker fee at eToro to buy value stock shares making the platform extremely competitive.

eToro Value Stocks screenshot

eToro offers trading on nearly all of the value stocks we highlighted above. For each stock, you can see detailed financial data including its price-to-earnings ratio, dividend yield, earnings per share, and more. You can even dive into detailed cash flow, balance sheet, and income statement data.

On top of that, eToro tracks Wall Street analyst price targets for a wide variety of stocks. These can be a helpful guide for investors wondering how much upside potential a value stock could offer.

eToro also supports copy trading, which allows you to automatically mimic the portfolio of another user. There are many experienced investors on eToro whose portfolios you can potentially copy. You only need to invest a minimum of $200 to copy trade on eToro and there are no fees for copying.

eToro is available in more than 100 countries worldwide and is regulated by major bodies in the U.K., U.S. and Europe. You can open a new account with as little as $100, depending on the country you are in.

Available Assets 5,000+
Pricing System 0% commission for share trading
Fee for Investing in Apple Stock None
Minimum Deposit $100 (country dependent)
Top Features
  • 0% commission on stock and ETF trades
  • Offers access to global markets
  • Supports copy trading
  • $100k demo account
  • Customizable mobile charts

Pros

  • Access shares from the US, UK, Europe, and Asia
  • Intuitive mobile user experience
  • Compare multiple stocks on a single chart
  • Copy experienced stock traders with just $200
  • Analyze trader sentiment around any stock
  • 0% commission on share trading

Cons

  • Cannot create custom technical indicators
  • $10 per month fee after 12 months of inactivity

What Are Value Stocks?

A value stock is any company that appears to be trading for less than its intrinsic value. This can happen for a number of reasons, but usually it is because investors are placing a greater stress on short-term headwinds, or expected negative developments, than a company’s long-term financial strengths.

Most value stocks are mature companies that have a long history of being profitable and can afford to pay a dividend, which is another reason to buy value stocks as they can provide investors with a dependable stream of income. These stocks tend to have steady, rather than spectacular growth rates.

 

3 Reasons for Investing in Value Stocks

It’s very difficult to time the market. However, long-term investors have found that having a portfolio that includes value stocks can deliver steady returns. Here are three reasons to invest in value stocks:

Value Stocks Perform Well in Economic Downturns

Value stocks, because they have steady cash flows and business models, tend to be less affected by economic downturns than growth stocks. In some ways, these stocks often lure investors during recessions because they are seen as safe harbors.

They Usually Offer a Dividend

As most value stocks also offer a dividend, that gives investors a steady income source and another reason to be patient while waiting for a stock’s price to rise. Many value stocks have a consistent history of strong shareholder returns through a dividends as well as stock repurchases.

They Offer Stability

Value stocks tend to be large-cap companies that have enormous resources and the wherewithal to withstand typical business headaches such as lawsuits, unfavorable media attention and short-term business downturns.

How to Identify the Best Value Stocks to Invest in

There’s no one-size-fits-all approach to identifying the best value stocks. Investors need to combine long-term analysis while determining if a stock is a true bargain. There are several ways to help finding a value stock:

Use Key Financial Ratios

A company’s price-to-earnings ratio (P/E) and price-to-book (P/B) can help determine if a stock is underpriced. It’s important, though, to compare a stock within its sector, as that will help show if a stock is inexpensive for a short-term reason or a long-term reason.

Track the Company’s Performance

Sometimes, there’s a good reason why a stock might appear to be inexpensive when it really isn’t. If a company’s long-term revenue trends downward, that’s more likely a value trap than a solid value stock. Look for companies who, despite short-term bad news, continue to show revenue growth and long-term earnings growth. That’s a good way of finding the best value stocks right now.

Analyze Catalysts that Could Affect the Stock

There are plenty of less obvious factors that help explain a company’s true value. A company under new management could signal a turnaround effort, but it could also mean there’s a big need for a turnaround. Industry trends, such as supply-chain issues, inflation or a shift in demographics could mean growth or a cliff ahead for a stock.

Where to Get Value Stock Tips and Insights

To learn more about picking stocks, we recommend checking out AltIndex, a subscription service that uses artificial intelligence (AI) and alternative data

AltIndex Stock Alerts

This means that it analyzes social media and other websites, app downloads, customer satisfaction ratings, and other data regarding a company.

The data AltIndex gathers over time is then compared to other companies while using machine learning to come up with investment insights. Stocks are given a score from of 1 to 100, simplifying the analytical process for investors.

With more than 10k members, AltIndex is a widely used and trusted service. It provides over 100,000 unique daily stock insights and alerts, and has a very impressive win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.

Conclusion

Value stocks come in all industries. There’s no shortcut to finding a good value stock, as it requires thorough research, both to understand a company’s fundamentals, but also to see which way industry trends are going.

Analytics can help you find potential value stocks, but you also need to see if a company is on the right track and has competitive advantages that extend into the future. Also, the best value stocks offer dividends that are safe. 

Auto stocks, banking stocks and housing stocks both provide good potential for value right now because investors are still reluctant to buy their stocks due to short-term headwinds that could change rapidly.

References

FAQs

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Jim Halley
Editor
Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…