In this article, we will look at the 5 best value stocks to buy for the next decade. If you want to read about the comparison between the returns generated by value and growth stocks, go directly to 10 Best Value Stocks to Buy for the Next Decade.
5. Exxon Mobil Corporation (NYSE:XOM)
PE Ratio: 10.01
Number of Hedge Fund Holders: 72
Exxon Mobil Corporation (NYSE:XOM) recorded strong gains in recent months as natural gas and oil prices rose to almost ten-year highs. During the first quarter of the year, Exxon Mobil Corporation (NYSE:XOM) earned free cash flows of $11 billion. Additionally, Exxon Mobil decided against dumping its own refining and chemical plant capacity, unlike many of its competitors. Over the past five quarters, Exxon Mobil Corporation (NYSE:XOM) has settled 40% of its net debt, bringing it down to only 0.4x anticipated EBITDA of 2022.
Keeping in view the company’s business fundamentals, analysts think Exxon Mobil Corporation (NYSE:XOM) is a solid value stock. Exxon Mobil Corporation (NYSE:XOM) stock is trading at a forward P/E ratio of only 7.56x with an attractive dividend yield of 3.8% as of August 16.
Saturna Capital shared its stance on Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. Here’s what it said:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
4. M&T Bank Corporation (NYSE:MTB)
PE Ratio: 14.51
Number of Hedge Fund Holders: 40
M&T Bank Corporation (NYSE:MTB) is a Buffalo, New York-based regional bank.
With a market cap of $33.6 billion, M&T Bank Corporation (NYSE:MTB) offers a forward annual dividend yield of 2.52% as of August 16. This translates into a quarterly dividend of $1.20 per share. M&T Bank Corporation’s (NYSE:MTB) earnings per share have increased steadily over time. More specifically, with the exception of 2014 and 2020, the company has increased its bottom line each year over the past ten years. Over the last decade, the company’s earnings per share have compounded at 8.2% per year.
On July 21, Betsy Graseck at Morgan Stanley maintained an Overweight rating on M&T Bank Corporation (NYSE:MTB) stock and increased the target price from $203 to $222. The move followed the company’s Q2 2022 results, in which the net interest income growth guidance for 2022 was increased. During the quarter, M&T Bank Corporation (NYSE:MTB) reported lower-than-expected fee income that was offset by lower-than-expected expenses. Following this development, Graseck increased her EPS estimates for the next year by 9%. Analysts believe the rising interest rate environment will be a positive value accretive for long-term investors.
3. Citigroup Inc. (NYSE:C)
PE Ratio: 6.82
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) is a New York-based diversified financial services company.
Chris Kotowski at Oppenheimer increased the target price for Citigroup Inc. (NYSE:C) from $81 to $86 in a research note issued on July 18. The analyst maintained an Outperform rating on the stock. Kotowski thinks that the company has a tangible book value (TBV) of $80 per share. According to him, the bank carries a clean balance sheet where non-accruals are only 0.5% of the total loan portfolio. Experts believe that Citigroup Inc.’s (NYSE:C) stock price performance following the Q2 2022 results reflects that the stock is trading at a discounted valuation. Furthermore, the 50 bps improvement in common equity tier one (CET1) reflects that the plan enforced by the new leadership of Citigroup Inc. (NYSE:C) is underway and could be executed successfully in the future.
Diamond Hill Capital shared its insights on Citigroup Inc. (NYSE:C) in its Q1 2022 investor letter. Here’s what the firm said:
“Shares of Citigroup declined in the quarter as investors became increasingly negative on capital markets activity. The company is also continuing to divest certain consumer banking geographies which may be dilutive to earnings in the near term.”
Berkshire Hathaway was the leading hedge fund investor in Citigroup Inc. (NYSE:C) during Q2 2022.
2. Intel Corporation (NASDAQ:INTC)
PE Ratio: 7.75
Number of Hedge Fund Holders: 104
Intel Corporation (NASDAQ:INTC) is an American technology company.
Tech stocks such as Intel Corporation (NASDAQ:INTC) have taken a beating in the recent past due to recessionary fears and supply-chain-related challenges. Intel Corporation (NASDAQ:INTC) maintains a strong market position, as seen by its gross margin of 44.8% and return on equity of 8.8% as of Q2 2022. A strong market presence offers Intel Corporation (NASDAQ:INTC) leverage with its suppliers, giving the company the potential to overcome temporary supply-chain obstacles.
With a PE ratio of 7.75x, analysts think Intel Corporation (NASDAQ:INTC) is trading at a discount of nearly 29% to its fair value. Furthermore, Intel Corporation (NASDAQ:INTC) is a top-tier dividend stock, as seen by the firm’s forward dividend yield of 4.02% as of August 16.
O’Keefe Stevens Advisory Inc. presented its insights on Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:
“Intel announced they are removing stock-based compensation from non-GAAP earnings in 2022 to report results aligning with semiconductor peers. This may seem like a reasonable thing to do as comparability between peers becomes easier. On the other hand, what exactly is the point of adjusted earnings? It is not to conform to some industry norm or because the management teams need to make performance metrics. The point of adjusting earnings is to present results in a light that more closely reflects the actual underlying performance of the business. That is, backing out expenses that might be one-time in nature, such as legal or fire expenses. First off, share-based compensation is an actual expense. Decreasing my ownership stake in a company without receiving any compensation is not free. If a company paid its employees in all stock, would they add back the entire SBC? What a margin profile that would be. Second, should a company be worried about reporting results similar to other companies? Every company is unique. Management should not waste time determining what expenses should be excluded. Run the business, don’t worry about adjusting the numbers.”
1. The Hartford Financial Services Group, Inc. (NYSE:HIG)
PE Ratio: 11.43
Number of Hedge Fund Holders: 32
The Hartford Financial Services Group, Inc. (NYSE:HIG) is a Hartford, Connecticut-based insurance and investment company with an experience of over three decades. The company considers itself a leader in casualty and property insurance, group benefits, and mutual funds.
In a note issued to investors on August 1, Tracy Benguigui at Barclays gave The Hartford Financial Services Group, Inc. (NYSE:HIG) stock a target price of $78 with an Overweight rating following the company’s Q2 2022 results. The analyst highlighted that the management’s commentary was cautiously optimistic following the results and added that the entity provides an attractive risk/reward ratio in the long term. The Hartford Financial Services Group, Inc. (NYSE:HIG) reported better-than-expected EPS during Q2 2022 and approved a new $3 billion share buyback plan, effective from August 1 until the end of 2024. The Hartford Financial Services Group, Inc. (NYSE:HIG) offers an annual forward dividend yield of 2.21% as of August 16, translating into a quarterly dividend of $0.39 per share.
The Hartford Financial Services Group, Inc. (NYSE:HIG) was held by 32 hedge funds as of Q1 2022.
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