Tags: value | stocks | fund | growth

NYT: Value Stocks Outperform Growth Stocks

By    |   Wednesday, 16 July 2014 09:36 AM

For much of the five-year bull market in equities, growth stocks have been in ascendancy. But so far this year, value has outperformed growth.

Large-cap value stock mutual funds returned an average of 7 percent in the first half of the year, and mid-cap value stock funds returned 7.8 percent, according to Morningstar, The New York Times reports.

Meanwhile, large-cap growth funds sported an average return of 4.7 percent, and mid-cap growth funds returned 4 percent.

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In the small-cap fund space, value-fund returns beat growth funds 4.7 percent to 0.9 percent.

Value stock are likely to continue their winning ways, Brian Belski, chief strategist at BMO Capital Markets, tells The Times. That's because a strengthening economy should boost corporate earnings, he notes. And "when corporate earnings growth is expanding, it's positive for value."

The large-cap value stocks favored by BMO include Norfolk Southern, UnitedHealth Group, Target and Principal Financial Group. The financial industry has "a lot of long-term value," Belski argues.

There are still buying opportunities out there.

"There are quite a few value stocks that have underappreciated growth potential," Brian Jacobsen, chief portfolio strategist at Wells Fargo Fund Management, tells The Times. "There are also growth stocks trading at a significant discount to intrinsic value."

Bank of America Merrill Lynch has created a list of top 10 value stocks that investors should look at to replace growth stocks in their portfolio, 24/7 Wall St. reports.

Company BofA's Target Price Tuesday's Closing Price
Citigroup $65 $49.29
Capital One $84 $84.90
Ensco $64 $54.56
Eaton Corp. $82 $78.62
Fifth Third Bancorp $25 $21.75
General Dynamics $145 $117.51
General Motors $55 $37.58
Hess Corp. $130 $97.83
Noble Corp. $40 $32.28
Wells Fargo $55 $51.35

"Clearly these are deep-value and contrarian shots the Merrill Lynch team is taking on sectors that underperformed over the past year, especially financials and the deepwater drillers," 24/7 Wall St. states.

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For much of the five-year bull market in equities, growth stocks have been in ascendancy. But so far this year, value has outperformed growth.
value, stocks, fund, growth
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2014-36-16
Wednesday, 16 July 2014 09:36 AM
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