If you’ve been following the headlines, you’ll be well aware of the value behind value stocks to buy. Basically, the smart money sees some risks ahead and they’re adopting a more prudent approach. It might make sense to mimic the transition.
Earlier in March, Reuters cited data from Bank of America that showed an outflow of $4.4 billion from tech stocks. That was the biggest outflow ever over a single-week period. What’s just as notable was where the inflows were occurring: basically, safe investments such as high-quality bonds and cash equivalents.
It’s not a signal to panic. However, it seems rather obvious that unmitigated risk-on sentiment is fading. Therefore, astute investors should consider these value stocks to buy on the dip.
Johnson & Johnson (JNJ)
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Currently, healthcare giant Johnson & Johnson (NYSE:JNJ) – which now focuses on pharmaceuticals and medical technology – appears to be one of the more compelling ideas for value stocks to buy. Specifically, JNJ trades at a trailing-year earnings multiple of 12.86X. That’s lower than 78.91% of its peers in the drug manufacturing space.
In terms of quarterly disclosures, J&J incurred a mixed year in fiscal 2023. In the first two quarters, the company’s average earnings per share landed at $2.49. This print missed the consensus view by nearly 3%. However, in the third and fourth quarters, management posted figures that exceeded the consensus EPS targets.
For fiscal 2024, covering experts believe that EPS will land at $10.65 on revenue of $88.43 billion. Last year, J&J posted $9.92 per share on sales of $85.15 billion. Given the gradual growth and steady business, the company could potentially hit the higher end of the estimate spectrum, which calls for EPS of $10.73 on revenue of $89.11 billion.
Combined with a forward dividend yield of 3.06%, JNJ makes a solid case for value stocks to buy.
Exxon Mobil (XOM)
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Oil and gas giant Exxon Mobil (NYSE:XOM) makes for an intriguing case regarding value stocks to buy. On one hand, it’s possibly marching toward irrelevance. But on the other, the world continues to run on oil. For now, XOM trades at a price/earnings-to-growth (PEG) ratio of 0.63X. In contrast, the hydrocarbon sector features a median ratio of 0.98X.
Financially, it’s difficult to pinpoint the forward trajectory of Exxon Mobil and its ilk. Last fiscal year, Exxon’s quarterly results were mixed. In Q2 and Q3, the company missed EPS expectations, yielding a negative earnings surprise of 3.85%. However, in Q1 and Q4, the oil stalwart handily beat consensus targets by an average of 10.5%.
For fiscal 2024, analysts believe that EPS will land at $8.28 on revenue of $306.99 billion. That’s disappointing compared to last year’s print of $8.81 per share on sales of $318.83 billion. Still, the high-side estimate calls for EPS of $10.39 and revenue of $351.5 billion.
That seems more believable given geopolitical dynamics poised to negatively impact hydrocarbon supplies.
General Motors (GM)
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While it’s bold and risky, General Motors (NYSE:GM) may be the most enticing among value stocks to buy. With legacy automakers pulling back their electric-vehicle ambitions amid demand challenges, combustion-powered cars have enjoyed new relevance. That suits GM just fine. Right now, shares trade at a forward earnings multiple of 4.83X. That’s lower than 95% of the competition.
Of course, when you’re talking about multiples that low, you start to worry about the value trap risk. However, that doesn’t seem to be the case with General Motors. For example, the automaker posted strong quarterly results in Q1 and Q3 last year. Overall, the average positive earnings surprise stood at 15.58% during the past four quarters.
For fiscal 2024, analysts anticipate EPS will come in at $8.31 on revenue of $162.62 billion. That’s a solid improvement over last year’s EPS of $7.11. It’s also a modest bump up from sales of $159 billion.
Even better, with combustion-powered vehicles receiving a relevancy boost amid falling EV demand, sales could reach the high end of the spectrum at $167.34 billion.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.