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Oct. 26, 2019, 10:26 a.m. EDT

Here are Wall Street’s favorite value stocks

There are signs that the 12-year period of growth strategies beating value is coming to an end

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By Philip van Doorn, MarketWatch


Bloomberg
Among sell-side analysts, 84% rate Mondelez, the manufacturer of Toblerone, Chips Ahoy, Oreo and many other snack brands, a ‘buy.’

Mark Hulbert, a MarketWatch columnist and stock market analyst with decades of experience, published an article that takes a balanced look at recent evidence that growth strategies may be replaced by value.

You can read Hulbert’s analysis here, and I urge you to do so. You may be surprised that his data point to the last dozen years as being an anomaly — value strategies have beaten growth over very long periods.

If you expect the outperformance of growth stocks to continue, you may be interested in this interview with Justin White, the manager of the T. Rowe Price New America Growth Fund /zigman2/quotes/200582479/realtime PRWAX -0.53% .

Getting back to value, Hulbert compared the recent performance of the S&P 500 Value Index against that of the S&P 500 Growth Index. These are overlapping subsets of the benchmark S&P 500 /zigman2/quotes/210599714/realtime SPX -0.30% . Here’s how all three indexes have performed during September.


FactSet

The S&P 500 Value Index is made up of 382 stocks, drawn from the S&P 500 by S&P Dow Jones Indices, based on price-to-book-value, price-to-earnings and price-to-sales ratios.

These ETFs track the S&P 500 Value Index:

• SPDR Portfolio S&P 500 Value ETF /zigman2/quotes/203509323/composite SPYV -0.77% — annual expenses are 0.04% of assets.

• Vanguard S&P 500 Value ETF /zigman2/quotes/201497396/composite VOOV -0.69%   — expense ratio: 0.15%.

• iShares S&P 500 Value ETF /zigman2/quotes/206097129/composite IVE -0.76%  — expense ratio: 0.18%.

• The Invesco S&P 500 Enhanced Value ETF /zigman2/quotes/206097129/composite IVE -0.76%  takes a more ”aggressive” approach to value, concentrating the portfolio in 100 stocks among the S&P 500 with the highest value scores. Its expense ratio is 0.13%.

Analysts’ favorite value stocks

Among stocks in the S&P 500 Value Index, Apple /zigman2/quotes/202934861/composite AAPL +1.61%  has, by far, the heaviest weighting, making up 8.7% of SPYV. But Apple doesn’t make the list below, as only 52% of analysts polled by FactSet rate the shares a “buy” or the equivalent. The next largest holding is J.P. Morgan Chase /zigman2/quotes/205971034/composite JPM -0.77% , with 44% “buy” ratings, and the third is AT&T /zigman2/quotes/203165245/composite T +0.35% , which also has 44% “buy” ratings.

Here are the 20 stocks in the S&P 500 Value Index with the highest percentage of “buy” or equivalent ratings among analysts polled by FactSet:

Company Ticker Share 'buy' ratings Share neutral ratings Share 'sell' ratings Closing price - Oct. 21 Consensus price target Implied 12-month upside potential
Assurant Inc. /zigman2/quotes/202796064/composite AIZ 100% 0% 0% $127.56 $143.25 12%
Marathon Petroleum Corp. /zigman2/quotes/209634297/composite MPC 95% 5% 0% $64.67 $78.74 22%
L3Harris Technologies Inc. /zigman2/quotes/201997607/composite LHX 94% 6% 0% $199.66 $241.67 21%
Pioneer Natural Resources Co. /zigman2/quotes/206736173/composite PXD 93% 7% 0% $125.39 $175.45 40%
Cigna Corp. /zigman2/quotes/208431372/composite CI 92% 8% 0% $166.74 $210.32 26%
FLIR Systems Inc. /zigman2/quotes/207487690/composite FLIR 90% 10% 0% $53.43 $58.89 10%
Equinix Inc. /zigman2/quotes/208927761/composite EQIX 88% 8% 4% $577.35 $578.27 0%
Centene Corp. /zigman2/quotes/208900023/composite CNC 88% 12% 0% $45.77 $68.35 49%
Norwegian Cruise Line Holdings Ltd. /zigman2/quotes/204183397/composite NCLH 88% 12% 0% $50.95 $64.56 27%
Jacobs Engineering Group Inc. 88% 12% 0% $93.11 $94.93 2%
LKQ Corp. /zigman2/quotes/210317139/composite LKQ 87% 13% 0% $31.65 $35.83 13%
Valero Energy Corp. /zigman2/quotes/200735463/composite VLO 86% 14% 0% $93.21 $99.79 7%
Quanta Services Inc. /zigman2/quotes/203420082/composite PWR 86% 14% 0% $40.54 $44.14 9%
UnitedHealth Group Inc. /zigman2/quotes/210453738/composite UNH 85% 15% 0% $243.92 $285.88 17%
Baker Hughes Co. Class A /zigman2/quotes/205323712/composite BKR 85% 15% 0% $22.12 $29.13 32%
TechnipFMC PLC /zigman2/quotes/207530935/composite FTI 85% 12% 3% $23.25 $30.89 33%
PVH Corp. /zigman2/quotes/208313660/composite PVH 84% 11% 5% $89.35 $100.89 13%
Lennar Corp Class A /zigman2/quotes/202536373/composite LEN 84% 16% 0% $61.02 $64.50 6%
IQVIA Holdings Inc. /zigman2/quotes/208640480/composite IQV   84% 11% 5% $143.14 $176.06 23%
Mondelez International Inc. Class A /zigman2/quotes/201769764/composite MDLZ 84% 16% 0% $53.57 $61.67 15%
Source: FactSet

You can click the tickers for more about each company.

Don’t miss: How to identify U.S. stocks with attractive growth potential

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/zigman2/quotes/200582479/realtime
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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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