18 Most Profitable Value Stocks Now

Published on January 13, 2024 at 4:52 pm by Fahad Saleem in Hedge Funds, News

In this article, we will take a detailed look at the 18 Most Profitable Value Stocks Now. For a quick overview of such stocks, read our article 5 Most Profitable Value Stocks Now.

Many analysts believe the optimism in the market seen during the last few weeks of 2023 stemming from a perception that the Federal Reserve might have won its battle against inflation was overdone. The latest inflation data poured water on investors’ hopes of quick interest rate cuts. In this backdrop some circles are expecting value stocks to rebound in 2024. Jeremy Siegel, Wharton School professor of finance, said in a program on CNBC that he sees about 15% gain in value stocks in 2024. When asked about value stocks’ underperformance over the past few years, Siegel said value stocks outperformed in 2022 but then the trend reversed. He expects a high interest rate environment will keep a lid on growth stocks in 2024. The professor expects short-term interest rates to come down in 2024 but he does not see a significant decline in long-term interest rates.

Overall, Siegel is quite optimistic about the stock market this year. He believes chances of soft landing are high and his worst-case scenario expectation is a “very mild recession” or zero GDP growth in the second or third quarter of 2024. Even if we see recession this year, the economy would later rebound and post “nice” growth, according to Siegel.

Methodology

For this article, we used a stock screener to identify stocks with PE ratios less than 15 and positive revenue growth rates. From the resultant list of stocks we picked 18 companies with the highest net income reported over the past one year.

With each stock we have mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

18. Consol Energy Inc (NYSE:CEIX)

Estimated Net Income (TTM): $691.84M

Consol Energy Inc (NYSE:CEIX) ranks 18th in our list of the most profitable value stocks to invest in now according to smart money investors.

As of the end of the third quarter of 2023, 25 hedge funds tracked by Insider Monkey had stakes in Consol Energy Inc (NYSE:CEIX). The most significant stakeholder of Consol Energy Inc (NYSE:CEIX) during this period was David Einhorn’s Greenlight Capital which owns a $252 million stake in Consol Energy Inc (NYSE:CEIX).

17. Popular Inc (NASDAQ:BPOP)

Estimated Net Income (TTM): $702.48M

Popular Inc (NASDAQ:BPOP) provides retail, mortgage, and commercial banking products and services in Puerto Rico and the US.

As of the end of the third quarter of 2023, 17 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Popular Inc (NASDAQ:BPOP). The most significant stakeholder of Popular Inc (NASDAQ:BPOP) during this period was Bernard Horn’s Polaris Capital Management which owns a $143 million stake in Popular Inc (NASDAQ:BPOP).

16. Blue Owl Capital Inc (NYSE:OWL)

Estimated Net Income (TTM): $796.23M

Alternative investment asset management company Blue Owl Capital Inc (NYSE:OWL) ranks 16th in our list of the most profitable value stocks to buy now.

Insider Monkey’s database of 910 hedge funds shows that 26 hedge funds had stakes in Blue Owl Capital Inc (NYSE:OWL) as of the end of the third quarter of 2023. The most notable hedge fund stakeholder of Blue Owl Capital Inc (NYSE:OWL) was Alexander West’s Blue Pool Capital which owns a $533 million stake in Blue Owl Capital Inc (NYSE:OWL).

15. Western Alliance Bancorporation (NYSE:WAL)

Estimated Net Income (TTM): $854.70M

Western Alliance Bancorporation (NYSE:WAL) shares have gained about 69% over the past six months.

During the third quarter, Western Alliance Bancorporation’s (NYSE:WAL) EPS came in at $2.30, beating estimates by $0.39. Revenue in the quarter jumped 7.9% year over year to $716.2 million, beating estimates by $28.43 million.

As of the end of the third quarter of 2023, 36 hedge funds tracked by Insider Monkey had stakes in Western Alliance Bancorporation (NYSE:WAL).

Miller Value Income Strategy made the following comment about Western Alliance Bancorporation (NYSE:WAL) in its Q3 2023 investor letter:

“Western Alliance Bancorporation (NYSE:WAL) also performed well during the quarter. The regional bank reported 2Q23 EPS of $1.96, -18.0% Y/Y, slightly below consensus of $1.97, and Net Interest Margin (NIM) of 3.42%, -12bps Y/Y, below consensus of 3.50%. Tangible Book Value (TBV) per share stood at $43.09 (P/TBV of ~1.1x) at the end of the quarter, +17.5% Y/Y, while the bank?s Common Equity Tier 1 (CET1) ratio came in at 10.1%, ahead of management?s estimates for 10%+, in-line with consensus. The company posted quarterly deposit growth of $3.5B, or +7.3% sequentially, with total insured and collateralized deposits representing 81% of total deposits and available liquidity coverage of 276% of uninsured deposits. For the second half of 2023 (2H23), management is guiding for deposit growth of $2B per quarter, continued CET1 growth towards the company?s 2024 target of 11%+, NIM of 3.55%, an Adjusted Efficiency ratio in the high-40?s, and net charge-offs of 10bps, at the respective midpoints.”

14. Webster Financial Corporation (NYSE:WBS)

Estimated Net Income (TTM): $907M

With a dividend yield of over 3% and a low PE ratio, Webster Financial ranks 14th in our list of the most profitable value stocks. Webster Financial Corporation’s (NYSE:WBS) net income over the past 12 months stands at about $907 million.

As of the end of the third quarter of 2023, 33 hedge funds tracked by Insider Monkey had stakes in Webster Financial Corporation (NYSE:WBS). The most notable hedge fund stakeholder of Webster Financial Corporation (NYSE:WBS) was Ric Dillon’s Diamond Hill Capital which owns an $114 million stake in Webster Financial Corporation (NYSE:WBS).

13. Lithia Motors Inc (NYSE:LAD)

Estimated Net Income (TTM): $1.04B

Lithia Motors Inc (NYSE:LAD) in October posted third quarter results. Adjusted EPS in the quarter came in at $9.25, missing estimates by $0.82. Revenue jumped about 13.5% year over year to $8.3 billion, beating estimates by $130 million.

Insider Monkey’s database of 910 hedge funds shows that 38 hedge funds reported owning stakes in Lithia Motors Inc (NYSE:LAD). The most significant stakeholder of Lithia Motors Inc (NYSE:LAD) was David Abrams’ Abrams Capital Management which owns a $706 million stake in Lithia Motors Inc (NYSE:LAD).

12. RenaissanceRe Holdings Ltd (NYSE:RNR)

Estimated Net Income (TTM): $1.38B

Citi analyst Charlie Lederer in November gave a Buy rating to insurance company Renaissancere Holdings Ltd (NYSE:RNR).

The stock has gained about 7% over the past 12 months.

As of the end of the third quarter of 2023, 41 hedge funds out of the 910 funds tracked by Insider Monkey reported owning stakes in Renaissancere Holdings Ltd (NYSE:RNR). The biggest stakeholder of Renaissancere Holdings Ltd (NYSE:RNR) during this period was John Armitage’s Egerton Capital Limited which owns a $278 million stake in Renaissancere Holdings Ltd (NYSE:RNR).

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about RenaissanceRe Holdings Ltd. (NYSE:RNR) in its Q3 2023 investor letter:

“In Financials, we prefer well-placed insurance companies and niche businesses while tending to avoid banks which face credit deterioration and rising deposit costs. RenaissanceRe Holdings Ltd. (NYSE:RNR), a provider of reinsurance and insurance products, surged ahead by 6%. Its second quarter numbers were solid across underwriting, property catastrophe premiums, investment income, and fee income. While there was an impact from severe storms during the quarter, RenRe?s losses were modest.”

11. VICI Properties Inc (NYSE:VICI)

Estimated Net Income (TTM): $2.37B

In December, Goldman Sachs analyst Caitlin Burrows started covering VICI Properties Inc (NYSE:VICI) with a Buy rating. The analyst thinks the stock’s valuation is “relatively attractive” on a multiple to growth basis.

As of the end of the third quarter of 2023, 33 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in VICI Properties Inc (NYSE:VICI). The biggest hedge fund stakeholder of VICI Properties Inc (NYSE:VICI) during this period was Ken Griffin’s Citadel Investment Group which owns a $292 million stake in VICI Properties Inc (NYSE:VICI).

Here is what Baron Real Estate Income Fund has to say about VICI Properties Inc. (NYSE:VICI) in its Q2 2023 investor letter:

“We have slightly decreased our already modest exposure to the triple net gaming REIT VICI Properties Inc. (NYSE:VICI), an owner of quality gaming, hospitality, and entertainment properties. The company pays a 6% dividend that is well covered, has a strong track record of making accretive acquisitions, and has additional opportunities for growth in the years ahead.”

10. Ryanair Holdings plc (NASDAQ:RYAAY)

Estimated Net Income (TTM): $2.2B

Ryanair Holdings plc (NASDAQ:RYAAY) ranks 10th in our list of the most profitable value stocks to invest in.

In December, UBS’ CIU Equity Sector Strategist Rudolf Leemann published a list of his top global stock picks for 2024. Ryanair Holdings plc (NASDAQ:RYAAY) made it to the list. Here’s what the analyst said about his top global stock picks:

“After dipping more than 10% between August and October, global equities strongly rebounded in November amid hopes central banks will pivot to a more dovish stance. Lower market rates and resilient earnings are likely to support the asset class going forward, but a lot of optimism seems to already be priced in and macroeconomic risks are more skewed to the downside.”

In its fourth quarter 2023 investor letter, Oakmark International Fund stated the following regarding Ryanair Holdings plc (NASDAQ:RYAAY):

“Ryanair Holdings plc (NASDAQ:RYAAY) (Ireland), a European ultra-low-cost airline, was the top contributor to the Fund?s performance this quarter. Ryanair released strong results for the first half of fiscal-year 2024 and was accompanied by an even stronger outlook, in our view. The company?s revenue grew 30% year over year, and average fares increased by 24% to EUR 58, driven by record demand and constrained capacity at European peers. Total passengers flown expanded 11% year over year to 105.4 million, and management is on track to maintain its target of 183.5 million passengers for 2024, depending on Boeing?s ability to meet its delivery commitments. Management is expecting full-year 2024 net income to be between EUR 1.85-2.05 billion ahead of the EUR 1.82 billion consensus estimate. The company?s strong free cash flow levels and balance sheet allowed Ryanair to reinstate a EUR 400 million dividend (35 cents per share). We spoke with CEO Michael O?Leary about additional uses for its excess capital and were happy to hear about an incremental EUR 1.5 billion return to shareholders starting in 2025. We continue to be optimistic about Ryanair?s future.”

9. Agnico Eagle Mines Ltd (NYSE:AEM)

Estimated Net Income (TTM): $2.53B

Agnico Eagle Mines Ltd (NYSE:AEM) ranks 9th in our list of the most profitable value stocks.

In October Agnico Eagle Mines Ltd (NYSE:AEM) posted third quarter results. Adjusted EPS in the quarter came in at $0.44, beating estimates by $0.02. Revenue in the period jumped 13.1% year over year to $1.64 billion.

8. United Airlines Holdings Inc (NASDAQ:UAL)

Estimated Net Income (TTM): $2.86B

With about $2.9 billion in net income (on a TTM basis) and a low PE ratio, United Airlines Holdings Inc (NASDAQ:UAL) ranks 8th in our list of the most profitable value stocks now.

As of the end of the third quarter of 2023, 34 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in United Airlines Holdings Inc (NASDAQ:UAL). The most notable stakeholder of United Airlines Holdings Inc (NASDAQ:UAL) was Dmitry Balyasny’s Balyasny Asset Management which owns a $130 million stake in United Airlines Holdings Inc (NASDAQ:UAL).

7. Arch Capital Group Ltd. (NASDAQ:ACGL)

Estimated Net Income (TTM): $2.93B

Insurance company Arch Capital Group Ltd. (NASDAQ:ACGL) ranks 7th in our list of the most profitable value stocks now.

As of the end of the third quarter of 2023, 25 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Arch Capital Group Ltd. (NASDAQ:ACGL). The biggest hedge fund stakeholder of Arch Capital Group Ltd. (NASDAQ:ACGL) during this period was Bob Peck and Andy Raab’s FPR Partners which owns a $276 million stake in Arch Capital Group Ltd. (NASDAQ:ACGL).

Baron Asset Fund made the following comment about Arch Capital Group Ltd. (NASDAQ:ACGL) in its Q3 2023 investor letter:

“Investments in Financials, Communication Services, and Industrials were also responsible for a portion of the outperformance in the period. Within Financials, higher exposure to this better performing sector coupled with gains from specialty insurer Arch Capital Group Ltd. (NASDAQ:ACGL) and investment management tools provider FactSet Research Systems Inc. added the most value. Arch?s shares gained after the company?s financial results surpassed Wall Street expectations amid favorable industry conditions. Net premiums written grew 28%, underwriting margins remained strong, net investment income more than doubled, operating ROE exceeded 20%, and book value per share grew 18%.”

6. Albemarle Corporation (NYSE:ALB)

Estimated Net Income (TTM): $3.32B

Jefferies in December published a report about Growth at a Reasonable Price (GARP) stocks. Albemarle Corporation (NYSE:ALB) was part of the list. Jefferies said the strategy of investing in GARP stocks has performed well in the past two quarters, and it could be a driver for performance in 2024.

“Over 60% of the periods we reviewed the spread vs. the Rusell 2000 (IWM) has been positive. We think this factor will continue its strength in the new year,” Jefferies said.

The London Company Large Cap Strategy made the following comment about Albemarle Corporation (NYSE:ALB) in its Q3 2023 investor letter:

“Albemarle Corporation (NYSE:ALB) ? ALB underperformed due to declining lithium spot prices in the quarter. We remain attracted to ALB, reflecting its low cost position in two consolidated industries (lithium & bromine). However, we recognize quarterly results can be volatile, driven by short-term supply-demand dynamics for the underlying commodities. It is important to note that ALB?s favorable position on the cost curve means the company can likely maintain healthy profitability even at trough prices.”

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Disclosure. None. 18 Most Profitable Value Stocks Now was initially published on Insider Monkey.

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Published on October 30, 2024 at by Inan Dogan, PhD

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