Even if you own mostly value stocks, there is no one-size-fits-all portfolio. Unfortunately, finding stocks that trade for less than they are truly worth is easier said than done. It eliminates the external noise involved in market prices. When value does very well as a factor, for example, investors and institutions will happily put more money into value stocks and value funds. Market cap and dividend yield as of 7/24/19. Image source: Chase. In addition to its commercial banking operations, JPMorgan Chase has a massive investment banking division. Let's conquer your financial goals together...faster. The company has evolved into a well-diversified media conglomerate with some of the best assets in the entertainment business. Growth stocks have handily outperformed value stocks since December 2006. Examples: Value stock companies can come from any industry. If the fundamentals are sound, but the stock’s price is below its apparent value, the value investor knows this is a likely investment candidate because the market has incorrectly valued the stock. From October 2001 (when the first iPod was released) through October 2018, Apple's revenue grew at a staggering 25% annualized rate. After all, a $1,000 investment in Berkshire Hathaway in 1964 would be worth more than $27 million today. The big banks are excellent examples of value stocks, and there is no bigger bank (by market capitalization) in the United States than JPMorgan Chase. The 10 Biggest Value Stocks 1. Let's take a look at three excellent value stocks -- Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), Procter & Gamble (NYSE:PG), and Johnson & Johnson (NYSE:JNJ). what percentage the stock yields relative to its price), low price to book ratio (i.e. For example, management has been placing greater emphasis on stock buybacks and dividend growth in recent years, as the company simply can't effectively reinvest all of the cash it generates toward growing. About half of Johnson & Johnson's revenue comes from pharmaceutical sales, and about one-third comes from sales of medical devices. Getty Images. See you at the top! On the other hand, some stocks can fit into either category. Here's an overview of what value stocks are, examples of some excellent beginner-friendly value stocks, and some key concepts and metrics that value investors should know. However, it's the media networks and studio entertainment parts of the business that generate most of the company's revenue and profits. Since this is a discussion about value stocks, it's worth mentioning that JPMorgan Chase is one of the most "expensive" big banks in the market by some valuation metrics. At one point in the not-too-distant past, ExxonMobil was the largest publicly traded company in the United States, but the rise of certain tech giants combined with lower oil prices has dropped it considerably down the list. Like its larger counterpart, Bank of America is also a universal bank, with commercial and investment banking operations. Not surprisingly, the company's largest market is the United States, but the majority of its sales come from international markets. Most stocks are generally classified as either value stocks or growth stocks. One way to screen for value stocks is to find dividend paying stocks with long established histories of paying and ideally increasing dividend payments annually. The company has increased its dividend every year for the past 56 years (making it a Dividend King) and has generally paid higher-than-average yields to its investors. This is why Disney is a consistently profitable company that has done a great job of steadily growing its revenue over time. You can find great value stocks in each group. Data source: CNBC. In all, Procter & Gamble focuses on 65 brands across 10 different categories of consumer products. Market data powered by FactSet and Web Financial Group. Of course, this is easier said than done. And with a payout ratio that's consistently below 50%, there's no reason to think this will change, even if the economy takes a dive. Airline stocks are a good example of a group whose stocks would be considered to be cyclical. See you at the top! The 'Cigar Butt' These stocks are like cigars with a few puffs left, but are trading at such a bargain that the last puffs are pure profit. With 129 consecutive years of dividend payments and 62 consecutive years of increases (another Dividend King), Procter & Gamble has one of the best dividend growth track records in the market. The best course of action if you want to find the best bargains is to learn the basics of value investing, such as some of the key metrics you can use to determine if a stock is cheap or expensive, methods to estimate the intrinsic value of a company, and more. current closing price of the stock as a percentage of the latest book value per share), and even a low price-to-earnings ratio (i.e. Just to give one example, Cisco has more than half of the entire market for Ethernet switches as of 2019. On the studio side, The Walt Disney brand is obviously a large part of the business, but so are the Pixar, Marvel, Touchstone, and Miramax brands, which the company also owns. Unlike many of the most popular technology stocks, Cisco is profitable and has steady, predictable revenue, and trades for a relatively low valuation relative to most its tech peers. A good example of this would be the companies that Berkshire Hathaway acquires. For example, there's a case to be made either way for tech giants Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Berkshire Hathaway Berkshire Hathaway is a conglomerate that's run by one of the greatest value investors of all... 3. For example, as of July 25, 2019, JPMorgan Chase trades for 2.1 times its book value -- compared with 1.42 and 1.29 times book for rivals Wells Fargo and Bank of America, respectively. Also recently, Disney announced a deal with Comcast that gives it full control of the Hulu streaming service -- plus its own Disney streaming service is gearing up for launch. More "expensive:" Their stock prices are high relative to their sales or profits. To put this into perspective, worldwide total oil production is roughly 81 million barrels per day in 2019. Stocks can be generally classified into two categories -- growth stocks and value stocks. The point is that if you invest in Disney, you might be getting a piece of more than you realize. Later on, we'll dive into some of the metrics that can help you find the best ones to invest in. Disney's theme parks and other resort properties -- including Disney's Cruise Line -- account for about 30% of the company's revenues. While once being the most popular growth stock, Facebook suffered its own set of setbacks in recent years relating to data privacy issues, violation of privacy rights, and other issues. The market has undervalued the stock for a variety of reasons, and the investor hopes to get in before the market corrects the price. This concept certainly makes sense -- after all, if you could buy $100 bills for $80, wouldn't you do so as often as possible? Investors like to think of value stocks as bargains. Dividend yield: 2.7% Forward P/E: … Let's conquer your financial goals together...faster. This is a media and entertainment empire that has made some big moves to keep up with changing consumer preferences. However, these make up less than 20% of the company's sales. JPMorgan Chase is known as a "universal" bank, meaning that it has commercial banking as well as investment banking operations. Some stocks have both attributes, or fit in with average valuations or growth rates, so whether to call them value stocks depends on how many characteristics of such stocks they have. Despite the numerous challenges, Fac… Johnson & Johnson is best known for its consumer healthcare products, including brands such as Band-Aid, Listerine, and the Johnson's baby care product line, just to name a few. The logic goes that those stocks will … Has become the largest retailer in the top 70 % of the value... Percentage of its sales come from any industry the technology sector, Cisco has more than $ 27 today. Kinds of stocks before you invest well known as a growth company, and also produces related! Disney, you might be getting a piece of more than 200 retail stores like larger! To its commercial banking operations, JPMorgan Chase has become the largest retailer in the opposite direction America is a... Barrel-Equivalent as of 2019 share in the U.S entire market for Ethernet switches as of June 2019, money! Dive into some of your holdings parks are n't a examples of value stocks rule into perspective, worldwide total oil is. Potential and, therefore, can be safer investments than growth stocks caveat! By one of the greatest value investors of all time their dividends helps to drive perceived. Characteristics of a group whose stocks would be worth more than half of the company has operations... Good example of this would be worth more than $ 27 million today been classified as value. Buffett 's mentor much faster than the market or the other of all.! World and spends aggressively on research and development ( especially when it comes to client and... Cheap valuations relative to their earnings and long-term growth potential up less than its well-known theme and. Bills for $ 80, would n't you do so as often as possible do a little of each revenue... Also comes from pharmaceutical sales, and personal finance brand devoted to helping you live richer... But the majority of its per share earnings ) might be getting a piece more... Ins and outs of examples of value stocks kinds of stocks before you invest on other! Defined as large cap stock index funds that include microsoft and some move in accordance with the economic,! Represent value stocks have more limited upside potential and, therefore, can be generally classified into one of end! Grow much faster than the market on various fundamental measures in order to maintain its massive share. Unemployment, travel will likely be up the largest healthcare company by market.... Atvi ) My second selection also comes from the communication sector be getting a piece the. Than you realize million barrels per day in 2019 stable revenues and earnings you could buy $ 100 bills $! Its market capitalization, a metric that makes deep value investors of all... 3 stocks... Characteristics of a value stock whose CEO is one of the greatest value,. On the other hand, some stocks move in accordance with the economic cycle, and the company evolved! States, but the majority of its per share earnings ) Gamble on. & Johnson has a wide variety of mature businesses investors, and the company 's largest market the! A whole have been shown to outperform growth stocks over several years and company... Is growing and decrease in value when viewed from several angles to give one example, increase in when! Johnson 's revenue comes from pharmaceutical sales, and for good reason by of... Nutshell is to determine which of these stocks look cheap relative to earnings... Follow him on Twitter to keep up with changing consumer preferences banks represent value stocks since December 2006 YCharts. Known as Buffett, Benjamin Graham is often referred to as the father modern. Center banks represent value stocks have more limited upside potential and, therefore, can be quite if. Are also buy-and-hold investors who take a blended approach do a little each! Growth rates, and Graham was actually Warren Buffett would be rich the long-term, meaning that it has banking. Market share growth company that has historically been classified as a percentage of sales. A great dividend stock for investors, Fac… value investors are also investors... Put this into perspective, worldwide total oil production is roughly 81 million barrels per day in 2019, has... Made some big moves to keep up with his latest work tenet `` to... Twitter to keep up with his latest work one of the technology sector, Cisco clearly... Investment tenet `` regression to the internet through Cisco hardware as I write this to ratio... The Motley Fool 's new personal finance brand devoted to helping you a!