We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Amidst Market Turbulence, These Stocks Soared to New Highs
Read MoreHide Full Article
The first trading day of 2024 was surprisingly rough, with the S&P 500 selling off by -0.7% and the Nasdaq by -1.7% respectively. However, there was one area of the market that saw considerable buying, and even made 18-month highs, which was the Vanguard Value ETF(VTV - Free Report) .
The Vanguard Value ETF focuses on owning large-cap stocks that reflect value characteristics, including lower relative valuations (low P/E ratio) and steady income generation.
Image Source: Tradingview
Time for a Rotation?
After such an incredible run for Technology and Growth-oriented stocks in 2023, could we see investors again favor Value-oriented names, and rotate into this more defensive sector?
We can see from the chart below that last year, VTV underperformed the broad market quite significantly. But if you zoom out a little further, you’ll see that VTV was a haven during the 2022 bear market. It was down just -5% that year while the S&P 500 was -20%.
Not that I think there is a major financial crisis around the corner, but I do believe the first quarter of 2024 may be highlighted by increasing uncertainty, thus favoring value-oriented stocks. And there is precedent for caution.
Image Source: TradingView
Election Year Volatility
This year will be punctuated by the US Presidential election in November, which is obviously a highly anticipated event. Although last year the US economy saw significant improvements in inflation along with sturdy growth and employment, Joe Biden still struggles with low approval ratings, threatening his re-election.
Additionally, Donald Trump has not been quiet about his interest in running again in 2024, although he has been mostly blocked by the incumbent GOP. This highly divisive race, which will include new competitors like Nikki Haley, is going to significantly increase uncertainty this year.
Election years are often highlighted by increased volatility, especially early in the year.
Furthermore, based on seasonal trends, the first three months of the year are often highlighted by considerable volatility with powerful swings higher and lower.
Image Source: EquityClock
Three Top-Ranked Value Stocks
If you are interested in positioning yourself in a more defensive manner, the value ETF VTV may be a practical way to remain exposed to stock market returns with less risk. Alternatively, if you are looking to add individual stocks these three are worth considering.
Berkshire Hathaway (BRK.B - Free Report) has seen earnings estimates upgrades from analysts over the last two months, giving it a Zacks Rank #2 (Buy) rating. Additionally, EPS at the conglomerate are projected to grow nicely over the next year. FY23 EPS are expected to climb 17.1% YoY to $16.36, while FY24 is expected to grow 11% YoY to $18.17.
One stock that has long been the template for value investing is Coca-Cola (KO - Free Report) . After experiencing a tough correction in late 2023, Coca-Cola stock has since drawn in a lot of buying. With earnings estimates trending higher, giving it a Zacks Rank #2 (Buy) rating, and a now hefty dividend yield its no wonder they have been buying.
Image Source: TradingView
Coca-Cola has long been increasing its dividend payment and today the payment is a generous 3% annually.
Image Source: Zacks Investment Research
The Progressive Corporation (PGR - Free Report) is another stock that has experienced some steady earnings estimate upgrades, giving it a Zacks Rank #2 (Buy) rating.
Additionally, The Progressive Corporation is expected to grow its EPS by 26.6% annually over the next 3-5 years. This is especially noteworthy for PGR, because it is also trading at a forward earnings multiple of 19.5x. Based on this valuation, and its growth forecasts, The Progressive Corporation has a PEG Ratio of just 0.73x, indicating a discounted valuation.
Image Source: Zacks Investment Research
Bottom Line
2024 has already begun the year with more volatility than was anticipated. For those investors who are concerned about that volatility adversely affecting their portfolios, adding exposure to value-oriented stocks like those shared here is one way to reduce risk.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Amidst Market Turbulence, These Stocks Soared to New Highs
The first trading day of 2024 was surprisingly rough, with the S&P 500 selling off by -0.7% and the Nasdaq by -1.7% respectively. However, there was one area of the market that saw considerable buying, and even made 18-month highs, which was the Vanguard Value ETF (VTV - Free Report) .
The Vanguard Value ETF focuses on owning large-cap stocks that reflect value characteristics, including lower relative valuations (low P/E ratio) and steady income generation.
Image Source: Tradingview
Time for a Rotation?
After such an incredible run for Technology and Growth-oriented stocks in 2023, could we see investors again favor Value-oriented names, and rotate into this more defensive sector?
We can see from the chart below that last year, VTV underperformed the broad market quite significantly. But if you zoom out a little further, you’ll see that VTV was a haven during the 2022 bear market. It was down just -5% that year while the S&P 500 was -20%.
Not that I think there is a major financial crisis around the corner, but I do believe the first quarter of 2024 may be highlighted by increasing uncertainty, thus favoring value-oriented stocks. And there is precedent for caution.
Image Source: TradingView
Election Year Volatility
This year will be punctuated by the US Presidential election in November, which is obviously a highly anticipated event. Although last year the US economy saw significant improvements in inflation along with sturdy growth and employment, Joe Biden still struggles with low approval ratings, threatening his re-election.
Additionally, Donald Trump has not been quiet about his interest in running again in 2024, although he has been mostly blocked by the incumbent GOP. This highly divisive race, which will include new competitors like Nikki Haley, is going to significantly increase uncertainty this year.
Election years are often highlighted by increased volatility, especially early in the year.
Furthermore, based on seasonal trends, the first three months of the year are often highlighted by considerable volatility with powerful swings higher and lower.
Image Source: EquityClock
Three Top-Ranked Value Stocks
If you are interested in positioning yourself in a more defensive manner, the value ETF VTV may be a practical way to remain exposed to stock market returns with less risk. Alternatively, if you are looking to add individual stocks these three are worth considering.
Berkshire Hathaway (BRK.B - Free Report) has seen earnings estimates upgrades from analysts over the last two months, giving it a Zacks Rank #2 (Buy) rating. Additionally, EPS at the conglomerate are projected to grow nicely over the next year. FY23 EPS are expected to climb 17.1% YoY to $16.36, while FY24 is expected to grow 11% YoY to $18.17.
One stock that has long been the template for value investing is Coca-Cola (KO - Free Report) . After experiencing a tough correction in late 2023, Coca-Cola stock has since drawn in a lot of buying. With earnings estimates trending higher, giving it a Zacks Rank #2 (Buy) rating, and a now hefty dividend yield its no wonder they have been buying.
Image Source: TradingView
Coca-Cola has long been increasing its dividend payment and today the payment is a generous 3% annually.
Image Source: Zacks Investment Research
The Progressive Corporation (PGR - Free Report) is another stock that has experienced some steady earnings estimate upgrades, giving it a Zacks Rank #2 (Buy) rating.
Additionally, The Progressive Corporation is expected to grow its EPS by 26.6% annually over the next 3-5 years. This is especially noteworthy for PGR, because it is also trading at a forward earnings multiple of 19.5x. Based on this valuation, and its growth forecasts, The Progressive Corporation has a PEG Ratio of just 0.73x, indicating a discounted valuation.
Image Source: Zacks Investment Research
Bottom Line
2024 has already begun the year with more volatility than was anticipated. For those investors who are concerned about that volatility adversely affecting their portfolios, adding exposure to value-oriented stocks like those shared here is one way to reduce risk.