investing

T. Rowe Price Value Has an Eye for High-Quality Bargains

Manager Mark Finn made some wise purchases of beaten-down stocks in late 2018, including Air Products & Chemicals.

Value-oriented funds have had a rough go of it. For the greater part of the past decade, bargain-priced stocks have lagged the broad market. That’s what’s so remarkable about the recent performance of T. Rowe Price Value (symbol TRVLX ), a member of the Kiplinger 25, our favorite low-fee mutual funds. Over the past 12 months to August 9, Price Value has outpaced Standard & Poor’s 500-stock index and 90% of its peers—funds that focus on large-company stocks trading at a discount—with a 6.0% return. “Everything is going extremely well,” says manager Mark Finn. “I feel like this is my time.”

After the correction in late 2018, Finn began to shore up his portfolio, focusing on sectors he thought were “going to be truly safe” and sticking with high-quality firms, he says. He favors large, attractively priced com­panies with strong balance sheets, smart executives and solid strategies for improving their businesses. He shed some shares in telecom firms in part because of concerns about a shifting competitive landscape. And he beefed up his holdings in health care, real estate investment trusts and utilities. “I’m being picky and careful about what I buy,” he says. “My acid test is I don’t want to buy or own something unless I’m going to own it through a recession.”

One boost to the fund’s recent performance came from savvy purchases of beaten-down stocks in late 2018. Air Products & Chemicals (a member of the Kiplinger 15 list of our favorite dividend stocks), Ball Corp. and Public Storage were all late-2018 purchases. Each of those stocks has posted double-digit gains of more than 29% since the start of 2019. By contrast, the S&P 500 has gained 17.8%.

This past summer, as stocks fell over trade worries (again), Finn found a few more bargains. “Energy stocks have been obliterated,” he says. He picked up shares in giant energy firm Chevron and added to stakes in ConocoPhillips and exploration-and-production company Concho Resources.

Finn’s somewhat contrarian calls have worked against him at times. The fund had lackluster years in 2016 and 2018. But since he took over in late 2009, the fund has returned an annualized 11.8%, which beats its benchmark, the Russell 1000 Value index, by an average of 0.7 percentage point per year.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022

Recommended

Is the Stock Market Closed on MLK Day?
Markets

Is the Stock Market Closed on MLK Day?

Both the stock markets and bond markets will have Monday off as the nation honors civil rights leader Martin Luther King Jr.
January 15, 2022
Stock Market Holidays in 2022
Markets

Stock Market Holidays in 2022

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2022.
January 14, 2022
5 Beginner Investing Tips for a Healthy Headspace
Becoming an Investor

5 Beginner Investing Tips for a Healthy Headspace

Lousy with numbers? Bad with money? That's OK. By adopting the right mentality, you can learn not only how to invest, but how to do so effectively.
December 30, 2021
The 2022 Stock-Market Outlook with Anne Smith and James K. Glassman
Markets

The 2022 Stock-Market Outlook with Anne Smith and James K. Glassman

Sure, measuring stock markets by calendar years is a bit artificial, but it’s still a good way to give your portfolio a checkup. We forecast what stoc…
December 28, 2021