Growth stocks have trounced value in recent years. With the bull market over a decade old and valuations toward the high end of their historical range, many have called for a comeback in value investing.
"Growth stocks are most simply defined as those that are expected to increase their earnings or revenues at a faster rate than the rest of the market. Value stocks are those that trade at a discount to the market on various fundamental measures," Barron's said.
Barron’s decided to look for stocks in the S&P 500 that exhibit characteristics often sought out by both growth and value investors. They’re cheap on one key metric, but also expected to increase earnings faster than their peers this year.
“The index’s average free cash flow yield (FCF) — a measure of return — is currently 3.7%. Analysts also expect the S&P 500 to grow earnings per share by 8.1% in 2020,” Barron’s explained.
Here are the dozen stocks in the S&P 500 that are at least 75% more attractive than the index on both metrics.
Name/Ticker/2020E EPS Growth/FCF Yield
- Valero Energy VLO 82.4% 10.9%
- Marathon Petroleum MPC 62.1% 11.9%
- Bristol-Myers Squibb BMY 43.1% 7.0%
- NRG Energy NRG 28.7% 8.7%
- General Motors GM 28.2% 15.0%
- Qualcomm QCOM 22.2% 6.5%
- H&R Block HRB 20.7% 10.3%
- State Street STT 17.6% 19.1%
- Alliance Data Systems ADS 16.0% 19.7%
- Anthem ANTM 15.8% 6.5%
- PulteGroup PHM 15.3% 8.0%
- Everest Re Group RE 14.7% 15.7%
However, fears that the coronavirus outbreak will hurt China’s economic prospects fueled a slump in investors’ global growth expectations, Bank of America Corp.’s survey showed.
A deterioration in the outlook for China saw bets for world economic expansion fall for the first time since October, in BofA’s poll conducted Feb. 6 through Feb. 13. A net 18% of respondents forecast stronger growth over the next 12 months versus 36% in January’s survey, according to a note, Bloomberg reported.
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