As we step into 2024, the stage is set for value stocks to potentially outshine their growth counterparts. Despite what the headline figures might suggest, there’s an undercurrent of uncertainty in the market. Tech-heavy indices are hitting new highs, yet the backdrop of widespread layoffs signals a more complex economic reality. While top growth companies have recalibrated in response to rising interest rates, positioning themselves for a stronger 2024, value stocks have quietly remained in the shadows, poised for a significant comeback in a market that’s still finding its footing.
Value stocks represent the seasoned players of the market – companies with established markets, solid products, consistent profitability, and robust cash flow, often accompanied by the bonus of dividends. In recent years, the limelight has been on the more glamorous growth stocks, overshadowing these reliable performers and leaving many of them undervalued.
As we navigate this year, it’s time to shift focus to these overlooked opportunities. Here are three value stocks that are not just ready for stability but are also positioned to surpass growth in the current market climate.
AT&T (NYSE:T)
AT&T stands out as a growth-oriented value stock with its ambitious plans for a more connected world. A key aspect of AT&T’s strategy is its significant investment in AST SpaceMobile’s (NASDAQ:ASTS) satellite-based cell service, slated for a commercial launch in 2024. This venture is just one of several factors bolstering AT&T’s potential in the coming year.
In its recent Q4 earnings report, AT&T revealed some mixed results. While earnings didn’t quite meet expectations, the report highlighted areas of solid growth. Notably, wireless service revenue saw a nearly 4% year-over-year increase, a sign of AT&T’s adept navigation through challenging economic waters. The company managed to maintain a strong subscriber base and implement effective pricing strategies.
One of the standout metrics from the report was AT&T’s postpaid phone net adds – the number of new customers signing up for AT&T plans. The quarter saw 526,000 net adds, surpassing the expected 487,500. This achievement is particularly impressive in a market that’s already quite saturated.
For investors looking for a value stock with growth potential, AT&T presents an intriguing option. Its involvement in innovative ventures and ability to grow in a competitive market make it a stock to watch in 2024.
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Sturm Ruger (NYSE:RGR)
Sturm Ruger is a compelling value pick, particularly as we approach an election year, a period historically known for boosting gun sales. Currently trading at an attractive valuation – 13 times earnings, twice its book value, and 1.4 times sales – this small-cap stock is well-positioned for a strong performance in 2024.
2023 posed challenges for Sturm Ruger, as CEO Christopher Kilroy noted a decrease in sales and profitability due to a decline in overall firearms demand, leading to a competitive market environment. However, looking at historical trends, gun sales reached a record high in 2020, an election year, more than doubling the sales rate of 2012 during President Obama’s second election.
While political motivations are varied and complex, they often play a significant role in influencing market trends in the firearms industry. As we head into another potentially contentious election season, RGR stands ready to benefit from the anticipated surge in gun sales. For investors seeking a value stock with potential for growth in the current political climate, Sturm Ruger offers an opportunity worth considering.
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General Motors (NYSE:GM)
GM stands out as a resilient player in the automotive industry, making it a top pick among value stocks for 2024. Despite facing labor disputes in 2023, GM not only maintained its profitability but also announced a $10 billion stock buyback and a 33% dividend increase. This strategic move brings GM’s total yield to an impressive $5.34. With its shares having dipped nearly 10% in the past six months, GM now presents as an attractively priced stock with significant growth potential.
Looking ahead, GM’s prospects in the electric vehicle (EV) sector are particularly promising. The company has reported a 33% year-over-year increase in EV sales, boasting six EV models on the market and more in the pipeline. While GM is still catching up to Tesla (NASDAQ:TSLA) in the EV race, its steady progress positions it as a key competitor in this rapidly evolving market.
The broader automotive sector may have its challenges, and EV popularity has seen some fluctuations. However, GM’s current valuation and its strategic moves in the EV space make it a standout choice for investors seeking value stocks with growth potential in 2024. GM’s blend of traditional automotive strength and forward-looking EV initiatives places it among the top picks in both the broader automotive and the specific EV sectors.
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