Growth stocks have often been investor darlings — the S & P 500 is driven by stocks in sectors like tech. Value stocks are less popular. They usually experience slower growth, with lower price-to-earnings or price-to-book ratios but also higher dividend yields. Such stocks are usually in sectors such as financials, industrials or consumer staples. But many growth stocks are also becoming expensive, prompting some investors to turn to value stocks. “The S & P 500 at 5,075 with expected earnings growth of 10% for 2024 gives us $243 a share and puts us at 21X earnings – its pricey, plain, and simple,” said Brian Szytel, senior managing director of The Bahnsen Group in late February. The S & P 500 closed around 5,078 on Tuesday. He said he wouldn’t own the index at that level. “I would however, own parts of the market shift to more value-oriented names and believe that rotation that started in 2022 from growth to value will resume. This is a time to earn ‘carry’, income, and dividends,” he said. Szytel says this is his main message for investors: Now’s a time for value rather than growth, and for stock-picking instead of passive management. Goldman Sachs also recently highlighted value stocks that stand out for their cheap valuations compared with earnings growth prospects. Those interested in value stocks can consider the following from CNBC Pro’s screen of the Vanguard Value ETF. All have 20% or more upside and a buy rating of at least 50%. The stocks that appeared are from sectors ranging from health care to energy and real estate. Analysts gave three stocks more than 30% upside – AES Corporation , Baker Hughes and Halliburton Company . AES also had one of the highest dividend yields in the list (4.3%). Royalty Pharma had the highest potential upside at 47%, a good buy rating of 87.5%, and a decent 2.9% for dividend yields. VICI Properties had the highest dividend yield in the list (5.7%).
