Best Value Stocks to Buy in 2024

best value stocks

Value investing involves finding stocks that are undervalued by the market. It takes a little work, though, to find the best value stocks to invest in 2023.

Some of the world’s best-known investors, such as Warren Buffett, Mohnish Pabrai, Peter Lynch and Benjamin Graham, are known for their value-investing approach. Value investors use market metrics to find stocks that can outperform the market and have competitive advantages. Every day investors can use those same metrics to find the best value stocks to invest in.

Here’s a quick list of 10 of the best value stocks to buy now:

10 Best Value Stocks to Invest in November

These 10 stocks are trading for less than 13 times earnings (trading for a price-to-earnings ratio of 13 or below) and, with just one exception that could soon change, deliver a dependable dividend to investors. It’s not enough, though, to seek the best value stocks with a low P/E ratio. To avoid value traps, we’re only including companies that have shown recent revenue or earnings per share growth. 

These 10 value stocks are varied by industry and geographic locations, but they all have a long history of being profitable. Many of these are value stocks with dividends.

  1. Toyota Motor Corp.: The large-cap Japanese maker of motor vehicles and motor vehicle parts is the largest automaker in the world and is in its 90th year. It also makes revenue from its Financial Services segment, finances leases to Toyota dealers and customers. Toyota (NYSE: TM) has seen its shares rise by more than 33% so far this year but it trades at under 10 times earnings.
  2. Bank of America: The large-cap banking and financial services company has been around more than 100 years. So far this year, Bank of America (NYSE: BAC) has seen its shares fall by more than 11%, dropping the stocks’ price-to-equity ratio (P/E) to slightly above eight. The company has seen net interest income rise for five consecutive quarters.
  3. JP Morgan Chase & Co.: The U.S.-based provider of financial and investment banking services has a history that dates to 1799 and is the largest bank in the world by market capitalization. JP Morgan (NYSE: JPM) has seen its shares rise a little more than 13% this year. The stock trades at under nine times earnings despite being on track for its second consecutive year of revenue and EPS growth.
  4. Toll Brothers: The housing market is expected to continue to rebound from the impact of rising interest rates and inflation that have put downward pressure on housing stocks. Mid-cap U.S. home builder Toll Brothers (NYSE: TOL), which builds homes in 24 states and was founded in 1967, is already showing financials that show that rebound. The stock is up more than 69% so far this year but is still trading at a little more than six times earnings.
  5. CVS Health: The large-cap pharmaceutical and primary care company, founded in 1963, is the largest healthcare company in the world. It has seen its shares fall by more than 26% this year, dropping its P/E to slightly above 10. Despite some macroeconomic headwinds, CVS Health (NYSE: CVS) is on track for another year of revenue and net income growth.
  6. Sekisui House: The large-cap Japanese home builder, founded in 1960, also builds properties in the United Kingdom, Japan, China, Singapore, Australia and the U.S. Sekisui House (OTC: SKHSY) builds detached homes, rental properties and does remodeling builds. The company’s shares are up more than 18% this year but the stock still trades at around 10 times earnings.
  7. Altria Group: The large-cap U.S. tobacco giant has seen its shares fall by more than 10% so far this year, dropping its valuation to below nine times earnings. Altria (NYSE: MO) has seen its revenue dip a bit but its net income and EPS are above last year’s levels.
  8. Rolls Royce PLC: The large-cap British company has roots that date back to the 19th century. Rolls Royce makes and services engines and operates through four segments: Civil Aerospace, Power Systems, Defense and ITP Aero. While the British company’s shares plunged during the height of the COVID-19 pandemic, they have bounced back as business has picked up.  Rolls Royce PLC (LSE: RR.L, OTC: RYCEY) stock is up 162% so far this year. 
  9. Allianz: The large-cap German-based insurance and asset management company has customers in 70 countries and is the No. 1 insurance company in the world. Allianz (OTC: ALIZY) was founded in 1890 and its shares are up more than 11% despite a rough third quarter, which it chalked up to a rash of claims due to natural catastrophes.
  10. Shell: The large-cap British-based oil and gas company was founded in the 19th century. Shell (NYSE: SHEL) has seen its shares rise more than 18% this year but the stock is still trading at less than eight times earnings. Some investors are wary of oil and gas companies because the price of oil is so volatile, but Shell is benefiting from higher oil prices and higher margins and just announced a $3.5 billion stock buyback program.

In-Depth Analysis of the Top Value Stocks to Buy

Let’s explore the top value stocks that most investors are sinking their teeth into in February 2024.

1. Toyota: Best Value Stock for the Future

Toyota just reported second-quarter earnings for fiscal 2024 and thanks to strong sales and a favorable exchange rate, it raised its annual guidance by 50%. In the quarter, the company reported revenue of $75.9 billion, up 8.4%, year over year, while net income was listed as $8.5 billion, up 194%. Through six months, the company said it had revenue of $146 billion, up 24%, year over year, while six-month net income was reported as $17.5 billion, up 117% over the first six months of 2023. 

The company is well set for the growth in electrical vehicle (EV) sales and in the quarter, said that EVs represented 35.3% of its total sales. It also announced that the Toyota Camry, the top-selling car in the U.S., will be sold only as a hybrid car starting in 2025.

Toyota price chartAlso, we increased the sales of electrified vehicles, mainly HEVs, with electrified vehicles constituting 35.3% of total sales.

The company delivers a twice-annual dividend and the yield is an above average 2.64%, but with a payout ratio of only 21.21%, leaving room for more increases.

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

The company, in its third-quarter report on Oct. 17, said that net income rose 10%, year over year to $7.8 billion, or $0.90 in earnings per share (EPS), while revenue, net of interest expense, rose 3% over the same period last year to $25.2 billion.

The company continues to see new business, with 200,000 new consumer checking accounts, the 19th consecutive quarter that number has risen. 

Bank of America price chartBank stocks have struggled this year because high interest rates have softened the demand for mortgages and consumer lending, and make short-term bonds and other yield-bearing investments more attractive than savings accounts. However, if the interest rate hikes have peaked, this could be an attractive time to get back in on a solid banking stock.

The company raised its quarterly dividend by 9.1% this year to $0.24, equaling a yield of around 3.24% 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 largest bank in the U.S., 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. 

The company’s stock has risen at a time that deposit flight worried investors when Silicon Valley Bank, Signature Bank and First Republic Bank all collapsed.

JP Morgan Chase price chartThe company reported third-quarter revenue of $39.8 billion, up 22%, year over year while net income was listed as $13.2 billion, up 35% over the third quarter of 2022. While revenue from Corporate and Investment Banking and Asset and Wealth Management were both down 12%, year over year, Commercial Banking revenue was up 79%.

The company has increased its dividend for 13 consecutive years, including a 5% boost this year to $1.05 per quarterly share this year, equaling a yield of around 2.8%. The payout ratio of 26.17% 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. As of the third quarter, it said it had 345 communities, many of them in the South and in mountain states. The company’s lending arm reported that 52% of Toll Brothers home buyers used the company’s mortgage company.  

With demand rising, there is a dearth of home listings, particularly new homes available on the market, so that plays into the company’s strengths. In the third quarter, Toll reported revenue of $2.64 billion in the third quarter, up 19%, year over year, and putting it on track for its third consecutive year of revenue growth. Toll also reported net income of $414.8 million, up 52% over the prior year period and EPS of $3.43, up 59%, year over year. 

Toll Brothers price chartThe company raised its dividend by 5% this year to $0.21 per quarterly share, the third consecutive year it has increased its dividend. The yield is a below-average 0.97% and the payout on the dividend is only around 5.8%, so a dividend cut would be unlikely.

5. CVS Health: A Healthcare Giant with Steady Revenue Growth 

The healthcare company’s stock recently faltered after the company downgraded its annual EPS guidance, saying it expected full-year EPS to be between $6.37 to $6.61, down from an earlier range of between $6.53 to $6.75. Still, that’s more than double last year’s full-year EPS of $3.14. That company has bounced back strong from COVID-19 doldrums, with 10 consecutive quarters of increased revenue.

CVS Health price chartIn the third quarter, CVS saw revenue growth in all of its sectors as it reported overall revenue of $89.8 billion, up 10.6%, year over year. Net income was listed as $2.26 billion, compared to a loss of $3.39 billion in the same period a year ago. EPS was reported as $1.75, compared to an EPS loss of $2.59 in the third quarter of 2022.

CVS increased its quarterly dividend by 9% last year to $0.605, the second consecutive year it has increased its dividend. Over the past decade, CVS has raised its dividend by 120%. The dividend yield is an above-average 3.5% and the payout ratio is about 36%.

6. Sekisui House: International Homebuilder with Consistent Growth

The company 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 House price chartIn the second quarter, the company reported revenue of $10.43 billion, up 2.7%, year over year, but $2.134 billion in net income, down 2.7%, over the same period last year. Seksuie said that its domestic housing market had seen a decline in housing starts, but rental housing starts were up. 

The company has raised its quarterly dividend for three consecutive years, including a 2.5% bump this year to $0.40, giving it a yield of around 3.3%. 

7. Altria Group: Value Stock with an Ultra-High Dividend

Altria, faced with declining cigarette sales, has been in the process of branching out more into smoke-free products. The company, hoping to improve its market share of smoke-free products, bought NJOY Holdings earlier this 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.

The company reported third-quarter revenue of $6.3 billion, down 4.7%, year over year, citing lower domestic cigarette sales due to industry-wide declines and competition from illegal e-vapor products. However, the company saw its EPS rise to $2.12 compared to just $0.12 in EPS in the same period last year.

Altria Group price chartInvestors sent the stock lower when the company recently reduced full-year guidance, saying it expected adjusted EPS of between $4.91 and $4.98, however 

Altria continues to have strong cash flow and through nine months, it repurchased 16.3 million of its shares for a cost of $732 million. 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% raise this 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’ Growth 

Rolls-Royce made some big changes this year, trimming staff and hiring a new CEO in Tufan Erginbilgic to start the year, and the moves are paying off.

Rolls-Royce reported six-month net income of £673 million pounds (roughly $835.5 million), up 438%, year over year, and revenue of 6.95 billion pounds (roughly $8.6 billion), up 30.9% over the first six months of 2022. The biggest reason for the increase was margin jumps in the company’s Civil Aerospace and Defence sectors.

Rolls-Royce price chartThe company also upgraded operating profit guidance to a range of £1.2 billion (roughly $1.5 billion) to £1.4 billion (roughly $1.7 billion) and upgraded its 2023 cash flow estimate to be between £0.9 billion (roughly $1.1 billion) and £1 billion ($1.2 billion). 

Rolls-Royce cites increased efficiencies in its own business and also at play is the continued uptick in flying hours by the airline industry that is driving 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

Allianz operates in five segments: Property-Casualty, Life/Health, Asset Management, and Corporate and Other. Despite a 30% drop in third-quarter net income, Allianz is retaining its yearly guidance for operating profit of between €13.2 billion (roughly $14.4 billion) and €15.2 billion (around $16.5 billion). The company reported third-quarter revenue of €36.5 billion (roughly $39.7 billion), up 4.5% compared to last year, but net income fell by 31%, year over year, to €2.1 billion (around $2.3 billion), thanks to what the company said was its highest level of natural catastrophe claims in a decade, with much of continental Europe seeing a spate of flooding and hail storms during the summer.

Allianz price chartThrough nine months, though, the company reported revenue of €122.1 billion (around $132.8 billion), up 4.7%, year over year, while net income was listed as €6.4 billion (roughly $6.9 billion), up 20.7%, over the same period last year.

Allianz has increased its annual dividend by an average of 10% over the past decade, including a 5.5% bump this year to €11.40 euros a share (roughly $12.40), meaning a yield of around 5%. The company strives to keep the annual dividend raises at around 5% while leaving a payout ratio at below 50%, leaving room for continued increases.

10. Shell: Consistent Earnings Growth Despite Revenue Drop

The oil and gas giant posted $40 billion in net income last year, but its shares haven’t kept up with its success. 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. 

However, the company has recommitted to shareholder value and it recently increased its quarterly dividend by 15% to $0.33 a share, equaling a yield of around 3.76%. It also said it would buy back at least $5 billion worth of shares in the second half of 2023.

Shell price chartShell, in the third quarter, reported revenue of $76,4 billion, down 21%, year over year and up 2.4% sequentially. Net income rose to $7.04 billion, up 4%, over the same period last year and up 124% sequentially.

Shell has shown itself to be capable of adapting to changing market conditions. It is in the process of moving beyond being a traditional oil and gas company to a more diversified energy company with a focus on sustainability.

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 headwinds, 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 steady stream of income. These stocks tend to have steady, if not spectacular growth rates.

Why Invest 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. Other 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, that’s due to traditional investor sentiment because these stocks are often turned to during recessions because they are seen as safe-harbor investments.

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 dividend 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.

AltIndex Review – AI Stock Picks and Insights for Value Stocks

Value stock investors may want to use AltIndex, a subscription service that uses artificial intelligence (AI) and alternative data to help find the best value stocks. AltIndex has several features that can be used to determine when to buy or sell value stocks.

AltIndex can deliver 10 unique data-driven stock picks to investors and provide real-time stock alerts for stocks in your portfolio or even the stocks you might be looking at buying. The service takes an atypical perspective on analysis, using social media trends, web traffic data, job postings, employee satisfaction and other metrics.

Stock pages on AltIndex have a spectrum of financial data, including net income, revenue, EBITDA (earnings before interest, taxes, depreciation and amortization) and cash flow, tracked over time. Investors can also compare that data against competitors’ stocks as well, helping them narrow down their value stock purchases.

Chart for AltIndex

There’s also an AltIndex Stock Screener to keep track of stocks on a watchlist.

The watchlist can help track a stocks’ performance, including news alerts, such as earnings data or management changes.

AltIndex also uses AI-generation price predictions that can help investors determine when a stock is priced right to sell or buy.

AltIndex Twitter Analysis

AltIndex’s $29 per month starter comes with 10 AI stock picks every month. The company’s $99 a month pro plan provides additional services and 25 AI-influenced stock picks every month.

Conclusion

Value stocks come in all industries. There’s no shortcut to finding a good value stock as it requires 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. While a company with a solid track record is a good start, it’s important to find stocks with competitive advantages that should extend into the future and ones with 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, due to interest rates.

References

FAQs

What is a Value Stock?

What are the Best Value Stocks to Buy Now?

Are Value Stocks Risky?

 

Jim Halley

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…