Mark Hulbert, a MarketWatch columnist and stock market analyst with decades of experience, published an article that takes a balanced look at recent evidence that growth strategies may be replaced by value.
You can read Hulbert’s analysis here, and I urge you to do so. You may be surprised that his data point to the last dozen years as being an anomaly — value strategies have beaten growth over very long periods.
If you expect the outperformance of growth stocks to continue, you may be interested in this interview with Justin White, the manager of the T. Rowe Price New America Growth Fund PRWAX, +0.45%.
Getting back to value, Hulbert compared the recent performance of the S&P 500 Value Index against that of the S&P 500 Growth Index. These are overlapping subsets of the benchmark S&P 500 SPX, +0.41%. Here’s how all three indexes have performed during September.
FactSet The S&P 500 Value Index is made up of 382 stocks, drawn from the S&P 500 by S&P Dow Jones Indices, based on price-to-book-value, price-to-earnings and price-to-sales ratios.
These ETFs track the S&P 500 Value Index:
• SPDR Portfolio S&P 500 Value ETF SPYV, +0.46% — annual expenses are 0.04% of assets.
• Vanguard S&P 500 Value ETF VOOV, +0.51% — expense ratio: 0.15%.
• iShares S&P 500 Value ETF IVE, +0.55% — expense ratio: 0.18%.
• The Invesco S&P 500 Enhanced Value ETF IVE, +0.55% takes a more ”aggressive” approach to value, concentrating the portfolio in 100 stocks among the S&P 500 with the highest value scores. Its expense ratio is 0.13%.
Analysts’ favorite value stocks
Among stocks in the S&P 500 Value Index, Apple AAPL, +1.23% has, by far, the heaviest weighting, making up 8.7% of SPYV. But Apple doesn’t make the list below, as only 52% of analysts polled by FactSet rate the shares a “buy” or the equivalent. The next largest holding is J.P. Morgan Chase JPM, +0.80%, with 44% “buy” ratings, and the third is AT&T T, +0.24%, which also has 44% “buy” ratings.
Here are the 20 stocks in the S&P 500 Value Index with the highest percentage of “buy” or equivalent ratings among analysts polled by FactSet:
| Company | Ticker | Share ‘buy’ ratings | Share neutral ratings | Share ‘sell’ ratings | Closing price – Oct. 21 | Consensus price target | Implied 12-month upside potential |
| Assurant Inc. | AIZ, -0.63% | 100% | 0% | 0% | $127.56 | $143.25 | 12% |
| Marathon Petroleum Corp. | MPC, +2.50% | 95% | 5% | 0% | $64.67 | $78.74 | 22% |
| L3Harris Technologies Inc. | LHX, -1.54% | 94% | 6% | 0% | $199.66 | $241.67 | 21% |
| Pioneer Natural Resources Co. | PXD, +0.43% | 93% | 7% | 0% | $125.39 | $175.45 | 40% |
| Cigna Corp. | CI, +0.81% | 92% | 8% | 0% | $166.74 | $210.32 | 26% |
| FLIR Systems Inc. | FLIR, +1.04% | 90% | 10% | 0% | $53.43 | $58.89 | 10% |
| Equinix Inc. | EQIX, +0.43% | 88% | 8% | 4% | $577.35 | $578.27 | 0% |
| Centene Corp. | CNC, +1.24% | 88% | 12% | 0% | $45.77 | $68.35 | 49% |
| Norwegian Cruise Line Holdings Ltd. | NCLH, +0.98% | 88% | 12% | 0% | $50.95 | $64.56 | 27% |
| Jacobs Engineering Group Inc. | JEC, +0.60% | 88% | 12% | 0% | $93.11 | $94.93 | 2% |
| LKQ Corp. | LKQ, -0.50% | 87% | 13% | 0% | $31.65 | $35.83 | 13% |
| Valero Energy Corp. | VLO, +2.44% | 86% | 14% | 0% | $93.21 | $99.79 | 7% |
| Quanta Services Inc. | PWR, +0.58% | 86% | 14% | 0% | $40.54 | $44.14 | 9% |
| UnitedHealth Group Inc. | UNH, +0.16% | 85% | 15% | 0% | $243.92 | $285.88 | 17% |
| Baker Hughes Co. Class A | BKR, +0.22% | 85% | 15% | 0% | $22.12 | $29.13 | 32% |
| TechnipFMC PLC | FTI, +3.29% | 85% | 12% | 3% | $23.25 | $30.89 | 33% |
| PVH Corp. | PVH, +2.12% | 84% | 11% | 5% | $89.35 | $100.89 | 13% |
| Lennar Corp Class A | LEN, -0.26% | 84% | 16% | 0% | $61.02 | $64.50 | 6% |
| IQVIA Holdings Inc. | IQV, +1.61% | 84% | 11% | 5% | $143.14 | $176.06 | 23% |
| Mondelez International Inc. Class A | MDLZ, -0.51% | 84% | 16% | 0% | $53.57 | $61.67 | 15% |
| Source: FactSet | |||||||
You can click the tickers for more about each company.
Don’t miss: How to identify U.S. stocks with attractive growth potential
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