Over the past year, the old rules of investing have mostly gone out the window, but one thing hasn't changed: Wall Street's best value stocks continue to be an attractive place for investors to plunk down their money for the long term. And that's likely to persist as we head into 2023.
The S&P 500 is down roughly 17% year-to-date and in a bear market. War continues to rage in Ukraine and disrupt energy markets. And significant changes in interest-rate policy continue to upend investment strategies that have been profitable for several years running.
But that's the thing about investing. If you want to get ahead, it's important to think beyond the obvious opportunities and consider a holistic approach that will generate returns even in even challenging environments. That involves looking beyond the once-fashionable growth investments to value stocks that might have been roughed up of late but still offer long-term upside.
These less-flashy value stocks are companies that are built with solid balance sheets and provide a steady flow of cash back to shareholders via dividends rather than investing aggressively in expanding their operations.
With that in mind, here are nine of the best value stocks to buy now. The names featured here are trading at deeply discounted valuations or a much lower per-share price than where they started the year, and each offers an above-market dividend yield. These are the kinds of high-quality value investments worth a closer look as we prepare for the new calendar year.
Data is as of Nov. 14. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Stocks are listed in order of lowest to highest dividend yield.
- Sector: Materials
- Market value: $40.5 billion
- Dividend yield: 2.5%
Nutrien (NTR (opens in new tab), $77.79) is among the world's biggest agricultural companies, selling seeds, as well as fertilizers like potash, nitrogen, phosphate and sulfate products. The Canada-based company is valued at roughly $40 billion, and serves an essential part of the global economy by supporting food production. What's more, its scale allows it to dominate the agricultural industry.
It's also on a path to grow even further, with plans to expand production of potash and nitrogen by 20% in the next three years. That's in part because of tight global supplies related to sanctions against Russia and Belarus, the second- and third-largest producers of these chemicals after Canada.
There's a bit of risk here as the shortage in fertilizer drove prices up so high that demand actually has fallen off lately as a result. But long term, there's perhaps nothing more certain than the demand for food around the world and a need to support global production with agricultural products like those provided by NTR.
The company is trading at a deep discount, with shares priced at less than six times next year's earnings. Plus, it's well-liked by analysts, with RBC, Credit Suisse and BMO Capital Markets in November reiterating Outperform (Buy) ratings on the value stock.
- Sector: Consumer staples
- Market value: $79.7 billion
- Dividend yield: 2.5%
Big-box retailer Target (TGT (opens in new tab), $173.26) is thriving thanks to finely straddling the line between offering lower-priced options for cost-conscious consumers, while also providing enough quality that it doesn't appear cheap or low quality. This has resulted in strong sales of Target-owned internal brands, including an 18% growth rate for this line in 2021 to more than $30 billion of the roughly $106 billion in total sales on the year.
Target has generally reliable results, but in May, the stock lurched 30% lower thanks to a big drop in profits for its first quarter amid higher expenses. In many ways that was the wrong news at the wrong time, as Wall Street had just begun its Russia-related meltdown that spring, and shares were punished dramatically.
Value investors should see a big opportunity in Target, however. While the stock has recouped some of its losses from earlier this year, it still has a ways to go before reaching the $250 per-share level it was trading at one year ago.
Target also just notched its 51st year of consecutive dividend growth, hinting at a serious commitment to shareholder value over the decades, spanning good markets and bad ones. That gives shareholders ample reason to hang on to TGT stock for the long haul.
Procter & Gamble
- Sector: Consumer staples
- Market value: $334.1 billion
- Dividend yield: 2.6%
Consumer products icon Procter & Gamble (PG (opens in new tab), $140.98) is the company behind such brands as Gillette, Tide, Downy, Crest, Febreze, Bounty and other products. It's a mainstay of cupboards and closets around the world, and provides a reliable revenue stream and consistent dividend as a result.
Specifically, PG is one of the best dividend stocks on Wall Street with an amazing 65 straight years where it has increased payouts. In fiscal 2022, a total of $18.8 billion was returned to PG shareholders in the form of dividends and stock buybacks.
Procter & Gamble isn't just sitting still and throwing off yield and repurchasing shares, however. Revenue from its fiscal Q1 that ended in September was up 7% year-over-year, in line with the growth rate across previous quarters.
P&G is a classic example of a recession-resistant company, as consumers will steadily buy paper towels and laundry detergent regardless of macroeconomic trends. Although management has said it expects its sales growth to slow in 2023, the premium brands and diversity of Procter & Gamble's product portfolio will ensure steady performance for many years to come.
As for its place on this list of best value stocks, PG is down more than 13% from where it started the year. As such, it's trading at 24.4 times earnings. While at first glance this appears pricey, it is well below the stock's five-year P/E average multiple of 34.4.
- Sector: Financial
- Market value: $392.8 billion
- Dividend yield: 3.0%
Big bank JPMorgan Chase (JPM (opens in new tab), $133.91) is an icon of Wall Street. It has assets of nearly $3 trillion and is the largest bank by market value in the U.S. It's also aggressively expanding into emerging markets and into the digital banking space to ensure it's not only dominant domestically, but also one of the top international players.
The strategic dominance of JPMorgan Chase is well established, with roots of the company dating back to 1799. During the financial crisis of 2008, CEO Jamie Dimon made his reputation as one of the shrewdest bankers on Wall Street, with the company outperforming its troubled peers and making fire sale acquisitions that included Bear Stearns and Washington Mutual. Over that period, JPM continued to grow even as other banks were shrinking.
Case in point: While smaller peers Bank of America (BAC (opens in new tab)) and Citigroup (C (opens in new tab)) were gutted by the financial crisis, JPM was among the first major financial organizations to return to pre-crisis dividend levels. In 2008, it paid stakeholders $1.52 per share annually, and by the end of 2014, its dividend payment was up to $1.56 per share. By contrast, Bank of America and Citigroup are both paying less than a third of their peak dividends per share.
A look at the long-term price performance of JPM vs. other big U.S. banks also proves it is a cut above the rest. Yes, you are beholden to some cyclical economic trends as banks tend to do better business when the broader environment is bullish. However, this is a stock with a store of value and staying power that can see your portfolio through any market.
- Sector: Healthcare
- Market value: $268.3 billion
- Dividend yield: 3.9%
AbbVie (ABBV (opens in new tab), $151.74) was spun out of Abbott Laboratories (ABT (opens in new tab)) in 2013 to separate its branded biopharmaceutical business from the lower-margin medical devices unit, as well as its consumer products division, which makes things like Ensure nutrition drinks and Similac baby formula. Since then, ABBV has raced up about 340% to outperform its sister company Abbott – and double the return from the S&P 500 in the same period.
ABBV is not without risk. It is heavily dependent on its product pipeline – and one-time blockbusters like its anti-inflammatory drug Humira are now up against patent expiration. But AbbVie has worked hard to replace current leaders with new and innovative drugs that will keep delivering. These include the company's Crohn's disease and psoriasis treatment, Skyrizi, and its atopic dermatitis drug Rinvoq. These two drugs saw year-over-year net revenue growth of 75.4% and 53.5%, respectively, in the third quarter.
Thanks to a strong outlook, industry publication Evaluate Pharma expects ABBV to be the largest of all Big Pharma stocks as soon as 2028 thanks to its continued growth. That kind of scale coupled with the consistent revenue delivered by its maintenance drugs will help provide a strong backbone for this Big Pharma mainstay for years to come.
What's more, investors can get one of Wall Street's best value stocks at a relative bargain. ABBV currently trades at 12.8 times forward earnings, well below the S&P 500's multiple of 16.5.
- Sector: Consumer discretionary
- Market value: $17.6 billion
- Dividend yield: 4.2%
Switzerland-based Amcor (AMCR (opens in new tab), $11.79) is lumped in with consumer discretionary stocks, but in truth, this company is more of a staples play than anything else – except for the fact that it deals in business staples.
Amcor is a packaging products company that produces both "flexibles" – specialized pouches and films – and "rigids" that include bottles, cans and jars. A wide variety of customers rely on Amcor products including beverage bottlers, pharmaceutical companies that need pill pouches, personal care companies bottling cleansers and cosmetics, packaged foods companies that need resealable pouches; the list goes on and on.
Admittedly, there may not be breakneck growth ahead as there isn't a whole lot of disruption in the bag and bottle business. But investors seeking out the best value stocks will love the rock solid operations. Amcor also boasts a rock solid share price in 2022, with a stock that is flat on the year while the rest of Wall Street has stumbled. Still, shares are trading at just 14.8 times forward earnings.
The icing on the cake is that Amcor is one of the vaunted Dividend Aristocrats – companies that have increased their shareholder payouts at least once a year for 25 years running. The current yield of 4.2% is more than twice that of the S&P 500, so the likelihood of future increases makes this an even more compelling income investment to buy and hold.
Walgreens Boots Alliance
- Sector: Healthcare
- Market value: $35.1 billion
- Dividend yield: 4.7%
A hybrid between a healthcare play and a consumer staples retailer, Walgreens Boots Alliance (WBA (opens in new tab), $40.54) is an integrated pharmacy company that provides prescription drugs and general merchandise through its brick-and-mortar locations. It is also ramping up primary care services in the U.S. as an alternative to traditional doctor offices.
The total makeup of stores includes about 8,900 retail locations under the Walgreens and Duane Reade brands, largely in the U.S. Internationally, WBA operates about 4,000 retail stores under the Boots, Benavides and Ahumada brands in the U.K., Ireland, Thailand and Chile. It also has some 500 international optical care centers, as well as 330 Walgreens-operated clinics including some under the VillageMD brand.
This massive footprint makes Walgreens a great value play with the scale to deliver consistent results, as well as a bit of diversification across geographies and product categories. These operations support a generous dividend, too.
Like so many stocks, Walgreens has been under pressure in 2022, but has been beaten down so much that it is now too much of a bargain to pass up. The company has rallied more than 30% from its summer lows, yet is still trading at a significant discount right now, valued at around 25% of total sales. By way of comparison, top Walgreens competitor CVS Health (CVS (opens in new tab)) is valued at about 40% of total sales.
Looking forward, WBA is undergoing a multiyear initiative to emphasize higher operating margins, customer loyalty and other key operational metrics. At the end of the company's fiscal year in August, management said the firm topped $2 billion in annual cost savings a full year ahead of schedule. That bodes well for long-term investors of this value stock.
- Sector: Consumer discretionary
- Market value: $47.6 billion
- Dividend yield: 7.4%
Some folks might not recognize Stellantis (STLA (opens in new tab), $14.80) at first glance, as it is a conglomerate based in the Netherlands. However, every American will recognize its brands that include Dodge and Jeep vehicles.
STLA was formed in 2021 via a 50-50 merger between Fiat Chrysler Automobiles and France's PSA Group that owns Peugeot and other European brands. It is now a roughly $48 billion automaker that has the brand portfolio and scale to ensure it stays relevant in an industry that is experiencing big growing pains right now.
Amid the disruption, which includes the rise of electric vehicles and the push for self-driving technology, it's important to have the deep pockets and efficiency to spin up new and interesting ideas before you get left behind. STLA is the result of consolidation across entrenched brands that are looking to cut costs and consolidate power, ensuring they stay relevant and adapt.
STLA stock is currently discounted so much it trades for just 3.2 times next year's earnings. That means Wall Street has priced in a load of negativity about both the pace of change here, as well as the pressures of the current market downturn. However, the company just beat expectations in its Q3 revenue report in November and confirmed its full-year guidance thanks to higher volumes and strong pricing to offset inflationary troubles.
For investors seeking out the best value stocks to buy, STLA is worth a closer look.
Medical Properties Trust
- Sector: Real estate
- Market value: $7.5 billion
- Dividend yield: 9.2%
The last pick has the biggest yield of all the value stocks featured here, one that is more than five times that of the S&P 500. That's an amazing stream of potential income, as well as a great hedge against any potential trouble down the road.
But it's not the yield alone that makes Medical Properties Trust (MPW (opens in new tab), $12.47) worth a look. As a "net lease" hospital owner, this company controls about 430 facilities in the U.S., Australia and Europe. That means it signs long-term deals with hospital operators to provide the actual medical services, but also to pay for any taxes, insurance and maintenance on a specific property.
And yes, the hospital operators have to pay rent on top of that, too! This all makes for an incredibly reliable business model, where MPW just has to own the initial locations and then harvest the long-term revenue stream.
This real estate firm's 29-cent per-share quarterly dividend adds up to a massive payday at present. However, it's also quite sustainable as MPW reported funds from operations of 46 cents per share in its August earnings report – more than covering that payout. It's also worth noting that MPW has raised its dividend for each of the last eight years, spanning even the pandemic-related disruptions that struck lesser stocks, proving its commitment to delivering for shareholders.
And there's little chance of those hefty dividends ever going away, given that this stock is structured as a real estate investment trust, or REIT. This special class of company must deliver 90% of taxable income back to its shareholders, creating a built-in mandate for big yield.
Jeff Reeves has covered finance and capital markets since 2008, contributing to outlets including CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today, US News & World Report and CNN Money.
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