3 ETFs for Cheap Stocks
Get the best bargain on bargain stocks.
Value stocks — those that are cheap in relation to earnings and other fundamental measures — have lagged growth stocks since 2008. But that pattern may be reversing. In the first quarter of 2016, Standard & Poor’s 500 Value index climbed 2.2%, while the S&P 500 Growth index lost 0.5%.
Great Deals on Practically Everything
In the interest of getting the best bargain on bargain stocks, we looked for low-fee exchange-traded funds that specialize in value stocks. For example, Schwab U.S. Large-Cap Value ETF (symbol SCHV), the lowest-cost ETF that focuses on large, undervalued firms, charges only 0.06% in annual fees. Microsoft, ExxonMobil and Johnson & Johnson top the list of its more than 300 holdings.
If you want to focus on cheap midsize companies, consider Vanguard Mid-Cap Value ETF (VOE), which charges 0.09% per year. It holds more than 200 stocks, with a median market capitalization of $9.6 billion. Top holdings at last word were Tyson Foods, ConAgra Foods and WEC Energy Group, formerly known as Wisconsin Energy.
Prefer to bet on the little guys? Columnist James K. Glassman calls small-cap value stocks "the single best sector for investors right now" in the June 2016 issue of Kiplinger's Personal Finance magazine. He recommends iShares S&P Small-Cap 600 Value ETF (IJS), an index fund loaded with small-cap bargains. Among its holdings is Sanderson Farms, a poultry processor that's one of Glassman's longtime favorites.