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Value Investing Regains Appeal: Top-Ranked ETFs & Stocks

The stock market has hit multiple highs lately powered by improving sentiments with fears of recession abating, corporate profits in good shape and U.S.-China trade tensions easing with hopes of an imminent phase one deal. The Fed third rate cut also gave lifted investors’ spirits (read: 10 Best Performing Stocks of S&P 500 ETF).

While most of the corners are shining in the latest rally, investors are chasing undervalued stocks. Value stocks refer to those that trade below their intrinsic value.

This is because value stocks have lagged the stocks of fast-growing companies throughout most of the decade-long bull rally. The S&P 500 value index has risen 136% over the past 10 years versus 220% for large growth companies. According to a strategist at BMO Capital Markets, the valuation gap between value and growth stocks hit an extreme level in mid-2018 and has grown further since then. This has made value stocks inexpensive again. Per analysts at Bank of America, value stocks are trading at one of their cheapest levels relative to momentum stocks.

Per WSJ, money managers and individual investors stepped up their buying of shares of value stocks, including banks and manufacturers, this month. In fact, allocations to bank stocks this month notched the biggest month-over-month change in exposure in more than a year.

The renewed interest has led to gains of 12% for the S&P 500 Value Index over the past three months, more than double the increase of the S&P 500 Growth Index. The latest rally helped the value index to outperform the growth counterpart from a year-to-date look and put it on pace for its strongest year since 2013 (read: A Spread of Growth ETFs at All-Time Highs).

A recent Bank of America survey shows that more than a third of the 230 fund managers they polled expect value stocks to post better returns than growth stocks over the next 12 months. This reflects and an increase of 21% from the October survey and the third-biggest month-over-month swing since 2007.

Given the value comeback, we have presented a bunch of ETFs & stocks with a top Zacks ETF Rank #1 (Strong Buy) or 2 (Buy) that have been leading over the past three months and will likely outperform in the coming weeks, especially in the current scenario.

Invesco S&P 500 Enhanced Value ETF SPVU – Up 13.6%

This fund follows the S&P 500 Enhanced Value Index, holding 98 stocks in its basket. It has accumulated $70.2 million in AUM while trades in light average daily volume of 7,000 shares. It charges 13 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Top-Ranked ETFs That Crushed the Market in a Month).

iShares Edge MSCI USA Value Factor ETF VLUE – Up 11.9%

With AUM of $4.4 billion, this ETF follows the MSCI USA Enhanced Value Index and holds a broad basket of 148 securities. It charges investors 15 bps in annual fees and trades in average daily volume of 450,000 shares. VLUE has a Zacks ETF Rank #1 with a Medium risk outlook.

Invesco Dynamic Large Cap Value ETF PWV – Up 10.5%

This ETF tracks the Dynamic Large Cap Value Intellidex Index and holds 50 stocks in its basket. It has amassed $1 billion in its asset base and charges 55 bps in annual fees. The product trades in average daily volume of 79,000 shares and has a Zacks ETF Rank #2 with a Medium risk outlook.

SPDR Portfolio S&P 500 Value ETF SPYV – Up 9.9%

With AUM of $4.5 billion, this ETF tracks the S&P 500 Value Index, charging investors 4 bps in annual fees. It holds 382 stocks in its basket and sees average daily volume of 996,000 shares. SPYV has a Zacks ETF Rank #2 with a Medium risk outlook (read: Value ETFs Trumping Momentum ETFs: Here's Why).

Vanguard S&P 500 Value ETF VOOV – Up 9.9%

This fund seeks to track the S&P 500 Value Index, charging investors 15 bps in fees and expenses. Holding 385 stocks in its basket, it has AUM of $1.1 billion and trades in volume of 39,000 shares a day. The product has a Zacks ETF Rank #2 with a Medium risk outlook.

KION GROUP AG KIGRY – Up 43.8%

It is a manufacturer of industrial trucks, producer of forklifts as well as warehouse automation. Though the stock has seen negative earnings estimate revision of 6 cents for this year over the past three months, it has estimated growth of 20%. It has a Zacks Rank #2 and Value Score of A.

SYNNEX Corporation SNX – Up 40%

This business process services company provides business-to-business services that help their customers and business partners grow and enhance their customer-engagement strategies. The stock has seen positive earnings estimate revision of 51 cents in the past three months for the fiscal year (ending November 2019) with an estimated growth rate of 15.8%. It carries a Zacks Rank #2 and has a Value Score of A (read: Value ETFs & Stocks Offering Real Value: 5 Top Picks).

Leggett & Platt Incorporated LEG – Up 36.7%

This is a global manufacturer that conceives, designs, and produces a wide variety of engineered components and products found in many homes, offices, retail stores, and automobiles. The stock has seen positive earnings estimate revision of 11 cents in the past three months for this year with an estimated growth rate of 3.23%. It has a Zacks Rank #2 and Value Score of B.

NetApp Inc. NTAP – Up 35%

NetApp provides enterprise storage and data management software and hardware products and services. It has seen positive earnings estimate revision of 9 cents over the past three months for the fiscal year (ending April 2020). The Zacks Consensus Estimate represents earnings decline of 7.52% for this fiscal year. The stock sports a Zacks Rank #1 and has a Value Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hewlett Packard Enterprise Company HPE – Up 31.9%

This company focuses on the enterprise-facing hardware and service business. The stock has seen positive earnings estimate revision of 6 cents, in the past three months, for the fiscal year (ending October 2020) with an estimated growth rate of 5.90%. It has a Zacks Rank #2 and Value Score of B.

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NetApp, Inc. (NTAP): Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report
 
SYNNEX Corporation (SNX): Free Stock Analysis Report
 
SPDR Portfolio S&P 500 Value ETF (SPYV): ETF Research Reports
 
Invesco Dynamic Large Cap Value ETF (PWV): ETF Research Reports
 
Vanguard S&P 500 Value ETF (VOOV): ETF Research Reports
 
Leggett & Platt, Incorporated (LEG): Free Stock Analysis Report
 
KION GROUP AG (KIGRY): Free Stock Analysis Report
 
Invesco S&P 500 Enhanced Value ETF (SPVU): ETF Research Reports
 
iShares Edge MSCI USA Value Factor ETF (VLUE): ETF Research Reports
 
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