Growth stocks have outperformed value for more than a decade, which may mean now is a good time to buy value stocks.
To be sure, you may want to wait for a correction in the stock markets to buy stocks. But in any case it is worth taking a look at value stocks.
“Based on our valuations, we continue to advocate for an overweight position in value and an underweight position in both the growth and core categories,” said Morningstar chief market strategist Dave Sekera. “From a pricing perspective, value stocks look like the best long-term investment in 2023.”
Morning Star stocks/10-best-value-stocks-buy-long-term”>put together a list of “the 10 best value stocks to buy for the long term.”
The stocks on this list come from Morningstar’s list of the best companies to own in 2023. The companies on this list have Morningstar Broad Ratings, meaning Morningstar believes they have competitive advantages for at least 20 years.
Additionally, companies have predictable cash flows and their management teams make smart capital allocation decisions, according to Morningstar. The stock is also trading below the company’s fair value estimates.
Here are the fantastic 10, starting with the most underrated as of September 19.
Tobacco, Banking, Aerospace
1. Imperial marks (IMBY) – Get a free report, the fourth largest tobacco company in the world. Morningstar Fair Value Estimate: $34. Friday closing price: $21.46.
Imperial Brands’ most recent half-year results beat Morningstar’s operating income estimate, although it fell slightly behind on revenue.
“Imperial appears to be delivering on its operational turnaround and appears likely to meet management guidance this year and beyond,” wrote Morningstar analyst Philip Gorham.
2. US Bancorp (USB) – Get a free report, the largest regional bank in the United States. Morningstar Fair Value Estimate: $52. Friday closing price: $33.38.
“US Bancorp has been one of the most profitable regional banks we cover,” Morningstar analyst Eric Compton wrote. “Few domestic competitors can match its operational efficiency and return on capital over the past 15 years.”
3.RTX (RTX) – Get a free report, an aerospace and defense contracting company. Morningstar Fair Value Estimate: $111. Friday closing price: $71.58.
“RTX can weather the financial impact” of the $5 billion charge that will be needed to inspect and replace aircraft engines over the next two years, Morningstar analyst Nicolas Owens wrote. That’s “thanks to its profitable and growing business.”
Food, Pharmaceutical, Banking
4. Campbell Soup (CPB) – Get a free report. Morningstar Fair Value Estimate: $61. Friday closing price: $42.61.
5.Pfizer (PFE) – Get a free report. Morningstar Fair Value Estimate: $48. Friday closing price: $32.69.
6. Wells Fargo (CFM) – Get a free report. Morningstar Fair Value Estimate: $61. Friday closing price: $41.23.
7. British American Tobacco (BTI) – Get a free report. Morningstar Fair Value Estimate: $47. Friday closing price: $33.30.
8. Kellogg (k) – Get a free report. Morningstar Fair Value Estimate: $84. Friday closing price: $60.21.
9. Medtronic (MDT) – Get a free report, the medical device giant. Morningstar Fair Value Estimate: $112. Friday closing price: $80.27.
10.Comcast (CMCSA) – Get a free report. The media, unconditional of entertainment. Morningstar Fair Value Estimate: $60. Friday closing price: $45.30.
The author of this story owns shares of US Bancorp, Pfizer, Medtronic and Comcast.
